When I was trying to find information on that dyed mulch, I found where it's normally made from recycled pallets - or construction debris. It can contain lead and abestos - just to name 2 very hazardous substances. It leaches chemicals into the soil and its long term effects on plant life or animals is unknown.
I did find a study on the new rubber mulch stuff that is popular for playgrounds now. Although more research is needed, the preliminary results indicate that regular exposure to this stuff is very dangerous for children. It's made from recycled tires so it releases the chemicals used to make the tires. While it may be easier on bones when the kids fall, it apparently can have some really nasty health consequences.
Livin in a Newfie Drool Zone