fungus in the yard

This post both is and isn't about my dog. This morning I was cleaning up after my dog before we played soccer in the back yard and I ran across what I thought was a very pretty look long-haired pure white caterpillar curled up by then fence. I didn't want to touch it and didn't want my dog to touch it ( because it really could be some poisonous amazonian devil bug-you never know ;-) ) so I went to move it to a stick and place it outside the fence in the wooded area behind my yard. It turns out it was actually some kind of fungus, or mushroom perhaps, growing there in the dirt.

Does anyone know if it would've been harmful? Maybe what it was? Should I scour my yard for more? I've always been under the impression that the more mysterious and attractive looking something growing in nature was, the more harmful it will be.
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I'm guessing what you found was Sclerotinia sclerotiorum. At first I thought it might be a mealybug, but since you said it was a fungus, I'd go with Sclerotinia sclerotiorum. Google both and click on images, and see which one looks like what you found. I could be totally off on this one, but based on your description, that would be my guess. I didn't find anything specifically indicating that it would be harmful if ingested by your dog, but you may want to check with your vet or even the poison control center.
Without a picture it's hard to say. I was thinking it might be a slime mold as they vary greatly in appearance. Once considered fungi, they have beem moved into a whole new group. I often refer to them as "poodle puke" because some forms are rather vomit-looking. They are no big deal, literal a here today and gone by Noon situation. We see them in late summer. They don't cause harm other than to look weird and maybe blow some black spores around. A garden hose and blasting them into the street where they dry quickly and disappear works best.

http://waynesword.palomar.edu/slime1.htm these are pics of just a few.........
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