The nether mud is an speculated/upcoming feature going to be on the nether enhanced mod.
Damages sun light dwellers (passive, aggresive, allied, YOU)
"corrupts" nearby grass to be corrupt dirt in a 6x6 sphere
3200 = 11 mud blocks
Bring corrupt dirt and nether mud in a nether furnace, which will then be smelted with an obsidian block and nether mud as fuel, this process usually brings two mud from one corrupt dirt block, since the mud wont usually survive this, but there is a chance it will...
Mud and WheatEdit
any wheat installed on Nether mud will poison it, and, once harvest able, you can use this wheat to poison arrows or animals, creating more powerful weapons (shooting poisoned arrows at spiders will affect their targeting, and so will attack other mobs, creepers explode, skeletons get a worse aim and zombies get slower) or just a new farming tool (poisoning a pig, and then killing will yield poisoned pork, which you can then use to attract mobs to your mob trap)
Poisoned wheat/bread do 1 damage a second (half hearth)