Not sure if any tank would have a problem since no two are alike. Now, having made that disclaimer statement.....
In my 72g tank, I would frag no more than 10 pieces at a time. Did it inside the tank. The slicing or peeling was done under water, and yes there was a very small "puff" of a release, but I don't know if it was any toxin. The pieces I'd frag were at least the thickness of your baby finger and I never got any adverse water readings or other corals retracting or anything like that.
After slicing/peeling, the rubberband and toothpick assembly took place outside the water on a table top and the resulting assembled frag went back into the main tank. Stayed for 2 or 3 days, sometimes more if I didn't make it back to the LFS
. I never had any adverse tank or inhabitant issues.
Then, one day I tried peeling instead of cutting. No "puff" or worry about anything emitted that way either. Of course maybe something baby finger sized provided a nice area to grab hold of to peel. I'm thinking smaller pieces fragged might make the "puff" release less of a concern.
Now, it's only my feeling, but NOT fragging when your xenia is really thick and abundant could cause it to crash. I've seen crashes described in tanks where the xenia chokes on it's own mucus if it gets too thick and can't get proper water flow and curculation thru it.
Maybe another method I used might help. Get a decent sized turkey baster. Plastic and rubber ball type. Cut with one hand and suck it up with the other. Might get some of that released "puff". Maybe when you remove the cut piece, have a small SW
rinse nearby before you start construction.