It's a soft wood, so I don't think it would work long term. I am not sure you could even get it to sink but I may be wrong. Never tried it.
People use Styrofoam to make backgrounds. It should be fine.
as for the styrofoam it will be contained behind a filter sponge so as long as it will not leach chemicals should be ok want it to float and move in the water flow in c02 difuser to keep c02 broke up. will need to watch close cause it is not pressed to densely.
if that piece of wood would hold up for any length of time in a tank, it would look awesome, especially if you have little fish that darted in and out of the holes all day.