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Its good in a mud pond for the same reason its good in any pond, it is favoured by the fish, it is more healthy for them in the nutrients etc in the water and also for colour I believe. Others will explain better the science behind it Im sure. The only reason we dont have our ponds green is for our own benefits, so we can see the fish better, its less healthy for the fish though.
I have allowed my pond to go green in the past for periods of time and havent suffered with any of the problems you mentioned appart from a bit of extra mechanical filter maintenance for a few weeks when I switched the UV back on.
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