Is it safe to eat windfall apples if I cut away any sections that look bad? Or should I only use them in cooking?
If you want to err on the side of caution, you should use them neither for fresh eating nor for cooking. There is a toxin produced by fungi called patulin which may be present in apples which have dropped from the tree and have been lying on the ground, according to a news release from University of Illinois Extension, dated September 20, 2012.
According to the Ontario Ministry of Agriculture (now archived), there are ways of diminishing the risk, but the processes involved are more appropriate to commercial apple processors than backyard orchardists. Excerpt:
“Current research suggests that varieties with an open calyx are a greater risk for patulin development within the core of the apple. In such a situation, damage to the fruit is not easily detected […]
“Patulin is also destroyed by fermentation, which means it is not found in either alcoholic fruit beverages or vinegar produced by fruit juices. Patulin will however survive the pasteurization process if present in the juice.”
Even if windfall apples do not contain patulin, any fresh cider you make should be pasteurized to prevent bacterial contamination (such as E. coli).