Yeah, that's definitely not something that kismet will be able to do... I looked through the Unrealscript terrain code and I don't see any easy way you'd be able to modify layer blending from there either. However, I'm not sure that modifing the layer blending would be the best way to acheive that effect in the first place. To get the patches to appear with a relative accuracy to where the player's feet are landing, the terrain would have to be tesselated way too densely. A better option might be to spawn a decal or particle system (or both) where the player's feet land, which wouldn't be too hard to implement, though you'd have to muck around in Unrealscript code.
I'm not sure if you're interested in doing that, but if you are, then basically all you'd have to do would be to extend the UTPawn class, modify the GetMaterialBelowFeet() function to store the material under the player's feet, and modify the ActuallyPlayFootstepSound(int FootDown) function to compare that material with whatever your mud material is and to spawn the corresponding decal/particle system if it's the right material (and then you'd have to extend the UTGame class to reference your pawn class instead of UTPawn). Not the most elegant solution, but it wouldn't require any additional functions and would keep the additional code required to a minimum.