i think it would be a perfect environment to start seedlings in.
they would certainly appreciate the gentler light and the high humidity.

the only problem i can forsee is if your seedlings "damp off", since you wouldnt want to introduce a fungicide where you have animals.

all depends. I wouldn't try to start cactii in a tropical terr nor tropical plants in a desert terr...

Unless you already have a terrarium, it is much cheaper to get a little plastic seedling propagation dome, or just cover the flats with plastic wrap until the seedlings germinate. You would very likely have more damping off in a terrarium, and using no-damp would not be a good idea, because there is no way of ever flushing it out of the soil. Plus, that stuff smells EVIL! Seedlings don't actually need high humidity once they are growing, unless you are growing orchids or certain picky tropicals. All perennials and bedding plants are fine without much special treatment. Good light is a must.