I've been wondering about this and turning our O2 up higher than recommended. Especially motivated to find out when Jarca asked if we could OD on oxygen in one of her posts. So ugh, one more thing to watch closely. This information comes from Wikipedia. http://en.wikipedia.org/wiki/Oxygen_toxicity. I just clipped the piece on lungs. There's lots more information about effects on the central nervous system and the eyes.

Pulmonary

Pulmonary toxicity symptoms result from an inflammation that starts in the airways leading to the lungs and then spreads into the lungs (tracheobronchial tree). The symptoms appear in the upper chest region (substernal and carinal regions). This begins as a mild tickle on inhalation and progresses to frequent coughing. If breathing elevated partial pressures of oxygen is not discontinued, patients experience a mild burning on inhalation along with uncontrollable coughing and occasional shortness of breath (dyspnoea). Physical findings related to pulmonary toxicity have included bubbling sounds heard through a stethoscope (bubbling rales), fever, and increased blood flow to the lining of the nose (hyperaemia of the nasal mucosa). The radiological finding from the lungs shows inflammation and swelling (pulmonary oedema). Pulmonary function measurements are reduced, as noted by a reduction in the amount of air that the lungs can hold (vital capacity) and changes in expiratory function and lung elasticity. Tests in animals have indicated a variation in tolerance similar to that found in central nervous system toxicity, as well as significant variations between species. When the exposure to oxygen above 0.5 bar (50 kPa) is intermittent, it permits the lungs to recover and delays the onset of toxicity.