From memory (and I'm sure husband will edit me here if I'm wrong) lye is sodium hydroxide. Caustic, nasty stuff. It doesn't fume, but will burn if you drink it. My mother told me a story (moral tale - don't drink anything you didn't see poured, don't pour toxic stuff into things we eat and drink from). A woman she knew had found a glass of slightly frosty looking liquid, thought it was cloudy apple juice and drank a big mouthful before she realised. She spat it out but the inside of her mouth was horribly burnt.
Some people also associate it with getting rid of evidence, like a lot of "bodies in the bathtub" cases. The thing is, to use sodium hydroxide for that takes A LOT of chemical and a lot more time than people realise.
You can use it to make soap. Mix it with oil or fat of some sort. But I don't think he was planning to make soap. I don't know what he WAS planning, maybe he didn't know himself. Maybe he had grand ideas fed by rumour and urban myth, but with little grounding in reality.
But after a comment like that I wouldn't let him make my tea. And if you see him reading any articles about Graham Young, I'd be worried.
Lye would taste soapy, slightly salty-ish, maybe sharpish and maybe not. It depends on how strong the solution is. It would have a slippery feel to the skin. If you put it in an aluminium container, it will react and begin to eat the aluminium. If you get it on your skin, wash your hands in lots of water. Add some vinegar too if you want to be really sure you've got it dealt with, but the water should be enough. It's nasty, but it takes a lot to do dangerous damage unless you do what my mother's friend did and drink a glass of really concentrated solution. More dilute solution would be clear, and wouldn't do much damage. It might make you sick, that's about it. Your stomach acid would neutralise a lot of it and your stomach has a corrosive-proof lining.
I would share the information about the lye, though. At least make sure SOMEBODY has it on record. It may mean nothing, or it may be a useful piece of information when his doctors talk to him.
Marg