I start all my seedling with a 400 watt MH and have not had any issues. I keep them in a humidity dome for the first week or so then take the dome off and let them grow untill they have 2-3 nodes. Then onto the big pots. Yes you can use a MH for seedling, as far as how far away that depends on you hood setup and wattage. I place mine about 12-18" away, but I use a air cooled hood.
Stlmatt