I think they're going to stay inside the village, because remember the swamp has poison mushrooms and monsters popping up everywhere so they won't want to leave safety. The flowers outside the swamp would be used just for Link to explore and find caverns.
The mud from Castor Wilds looks fine and we could use it to differentiate the swampy muddy water of the swamp from like, Lake Hylia, but it will have to function identically to regular deep water, since we don't have Pegasus Boots.
BTW, I forgot to mention but the Deku area's plot involves doing a few things for the Deku. In the upper left corner, you've got to rescue some Deku from monsters, they're trapped on that temple (the Kokori Gate). In the bottom right, someone asks you to destroy that mushroom. And in the upper right, I think that's where these stolen Deku Nuts will have ended up.
These tasks are covered in the Plot section of the Wiki, which yesterday I updated so it had all the information we'd discussed in the posts for the different chapters of the game.
http://wiki.zfgc.com/KOT:PlotIt should be way more definitive now, rule of thumb is other things that contradict the "Plot" page are
probably old information and need to be updated. I'll try to go through sometime and catch the old info before anyone gets confused.