Here in CA (our part of it, anyway) redwood is what is used for mulching (there are various sizes and styles (bark chips of various sizes versus shredded "gorilla hair" (ugh), which may also also (gack) be dyed), and for soil conditioning redwood compost is often used. I have used redwood chips for mulch in my kitchen garden for forever, and they do break down and need replenishing. (The smaller chips, obviously, break down quicker, but I think give better soil coverage and look nicer.)
So I have no fear of, or problems with, using redwood chips with abandon in my soil or in my pots. The only problem is that if you are going to use a lot of it, then it is cheaper to buy it by the truckload, which is something (lacking a truck) that I myself can't do. While I yearly buy a few bags (of the smallest size I can get) for the kitchen garden, for ornamental mulching or for mixing into the seedling bed or potting soil, I get my garden helpers to bring in a truckload of the fine/small chips. (Having worked for a landscape contractor, they know of sources which I do not.) Hence, the perennial mulch pile near a gate on one side of our property. We keep chipping away at it, using it in various spots, and replenish it as needed (generally once a year, in the spring).