new to Floria, have 2 magnolia trees in front/side of yard-- the flowers (when they bloom, can't figure out the schedule) are the typical white like I remember from the 60's in Cairo, IL (southern tip of the state).

However, these get seed cones (about 3 inches tall)  that have bright red seeds!  Never have seen nor heard of this!  

Questions: can I pick and use these seeds for crafts?  Are they poisonous?  Do birds eat them?  Do squirrels?  Do I need to pick them up off the ground when they fall and safely dispose of them?

The magnolia trees that I know about in the South always bloom in May, have the seed pods with red seeds about Sept. No knowledge about re-seeding, but I do not think that is possible. I never see "new" trees growing below existing trees.

This sounds normal to me. This wonderful smell of the blossoms

Mary

The seed pods you describe are normal. It may that the season was too short in Illinois for them to develop. Birds will eat them; migrating birds especially enjoy them. As to whether they're poisonous, there's much, much misinformation online about supposedly poisonous plants, so I believe none of it. However, for what it's worth, magnolia seeds aren't on the ASPCA's list of substances poisonous to dogs.

You can pick them up for neatness' sake; they will interfere with lawn mowing and will be messy once the red berries have disappeared from the cones.

The nice thing about magnolia seeds is that you can start new trees from them. Here are how-to directions from the University of Mississippi Extension Service:

Gather seed from the cone as soon as they have begun to turn red (usually in early October). Soak them in water to which one tablespoon of baking soda has been added for each gallon. This prevents fermentation while the seeds soak for two to three days. Remove and clean off the pulp. Wrap some moist material such as peat moss, or even damp paper towels, in a plastic bag with the seeds to prevent them from drying during storage. Store the seeds at a constant temperature of about 45 degrees F for at least three months. The hydrator of a kitchen refrigerator is an excellent place for seed storage. Following storage, they can be planted in fertile soil while still moist. Protect the seeds from birds and rodents until germination is complete (about two weeks in warm temperatures).

Hope this helps.