plot device would definitely come to mind...how about traps?
Take the normal pit trap, put a bunch of this stuff in the bottom, and pow, you fail your reflex save and you're trapped...
it deals one damage a round, torture perhaps?
or with the pit trap idea, maybe put it up to shoulder level, so when they fall in, they get dealt the damage but their arms are trapped and therefore htye cannot escape the damage?
Oh, and for the nuclear bomb idea, look at relics and rituals (I or II I forget which one), the fire ward (fireball but takes 10 minutes to cast and triggers when something happens), put it in a tackle box, say "when the door opens, go off." Open the tackle box, all of em go off, lots of damage, it's really fun

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arm an army of kobolds with it, and have them tangle foot bag you to the floor with time
fresh lunches are alwasy nice, but soemthing about encasing them in goo seems kind of weird.
Make walls out of it?
Perhaps create rules for more of it hindering psionics even more (A HUGE amount could be a nice plot device).
Preserving your dungeon of death from rust?
oooo, did anyone ever watch Double Dragons the cartoon?
I'm vaguely remembering from my 4 year old days that the evil guy had this wall that would basically suck in and forever preserve the henchmen that had failed him in gray goo. Make a big pit of it, store all your enemies.
Transporting fruit...
In a land with no refrigerators, you NEED THIS.
I dunno, kind of useless, but in a pinch it could be cool...