It's hard to tell what the toy is made of because the picture is so small, and I couldn't find a pic that was significantly bigger. There are some parts that look like they might be some kind of thin wood, which is OK. I'm more concerned about the rope bits - any time there are dangling strings on a toy, you have to make sure that they're short enough that they can't get tangled around the bird's leg or other body parts. Budgies have very thin legs so the rope wouldn't have to be very long to be a tangling hazard. I'm not crazy about the loose fibers either, those could cause problems if the birds ate them. But most birds don't eat stuff like that so it may be OK.
BTW our main website has a section on make-your-own bird toys at
http://www.littlefeatheredbuddies.com/c ... enter.htmlIf the room was brightly lit when the feathers started flying then it may have been a fight. But if it was dark then it sounds like your birds had a night fright. This is when something startles them in the night and they try to fly away in a panic, the way a wild bird would do if it was threatened by a nocturnal predator. Cockatiels are especially notorious for having night frights but it happens sometimes with other species too. Night frights can do a lot of damage to the wing feathers since the birds end up flapping wildly against the cage bars and anything else that happens to be in the cage. The flapping will usually stop as soon as you turn on the light because then they can see that everything is OK, but it might take a few minutes for them to calm down.
If it was a night fright you don't have to separate them of course. If there's a recurring problem with night frights, it might help to keep a small night light on so the birds can see better and realize that there's nothing dangerous going on. If you can figure out what's setting them off you might be able to do something about it too. But hopefully this won't happen very often.