Peroxide is VERY potent! There have been several unfortunate cases where people had the concentrated 35%, and someone in the household (such as a child) drank it, thinking it was water, and then died from it! Often, if adults accidently do this, it won't kill them, but will instead make them very sick, and cause gastrointestinal damage. 35% peroxide must ALWAYS be dilluted before using! The bottle should be labled, and kept out of reach of children.
In reality, the concentrations that are used for oral, skin abosrbtion, or intravenous peroxide therapy are typically dilluted with water to a concentration of between 0.035% and 0.1%, which is a VERY VERY small amount of peroxide compared to the undilluted 35%!
3% peroxide is commonly sold in drugstores (without a prescription), and is safe to use in small amounts on external wounds, for gargling, vaporizers, and ear and nose irrigation. 7% is what is commonly used in full-strength tooth whitening products (the kind you get from the dentist.) It's only the highly concentrated peroxide that is harmful if you were to accidently drink it or something. Also, the digestive system is more sensitive to peroxide than other parts of the body.
The reason people buy the concentrated 35% food-grade peroxide is because it is more convenient for using it in the bathtub (only 8oz per bath vs. 4 big quart-sized bottles of 3% peroxide per bath) and doesn't have any chemical stabalizers added (like the 3% drugstore peroxide has.) Also, most of the official protocols are based on using drops of 35% added to water. For example, the recipe for oral peroxide use is starting with 1 drop of 35% in a cup of water, then gradually increasing it, over the course of a month, to 25 drops per cup of water, three times daily.)