[slink182]

Talcum or baby powder would be a good choice. It's easily washable out and can be banged out of most clothing & gear without too much difficulty. Avoid anything food-based, like flour; it will go gummy when mixed with moisture (sweat), and if you don't get it off your gear & weapons quickly, it'll gunk in place once moisture hits it. Also, flour can attract bugs & vermin. You could also add colour to the talcum/baby powder by grinding biodegradeable paint pigment down and adding it into the mix. Hobby shops (like Michael's) carries this kind of paint in a dried cake form.

Generating a large enough cloud would be an interesting design exercise. I imagine the design would be similar to that of the Mad Bull XMPB4 40mm grenade, but significantly larger in scope. Delivery system would be similar, though. However, at the "firing" end, instead of just an open hole, there would be a deflection plate (like a rain cap/china hat you see on some factory stacks). When the powder is discharged, instead of firing in one direction, the plate would redirect the powder and blast out at 90 degrees in all directions. With a large enough gas reservoir and enough powder, it should create a "blast" at least 15 feet in diameter. The noise of it going off would also be a huge distraction. Maybe power it on a 20 oz CO2 canister. Not certain how it would be triggered - IEDs are usually triggered manually at a distance. Sitting around waiting for a juicy target to stumble by wouldn't be much fun...

Anyway, just a thought...