=>Can anyone point to a good reference source? Books, tapes, DVD's. =>Also, when it says to use plaster, will dry wall mud do or is actual =>"plaster" necessary?
Basic Scenery for Model Railroads (Kalmbach Publ.), or any of the books that deal with building a complete layout such as HO Railroad from Start to Finish, or one of Kalmbach's general how-to books, such as Basic Model Railroading. The ones that deal with complete layouts will answer questions you haven't yet found pout you need to ask. :-)
Dry wall mud dries much more slowly than plaster, but apart from that it's OK to use. Not so good for casting rock faces from molds. Avoid quicksetting ("patching") plaster.
Have fun!