Acid is something I always thought would be a fun addition to MineCraft, and below is a summary of how I think it would work.

Behavior::
-Eats away at most materials, breaking most blocks it is in contact with over time.
-Obsidian, Glass, Bedrock, Diamond Ore, Diamond Block, Soulsand, Glowstone, Endstone, NetherBrick and Netherrack don't get eaten away.
-Stone materials are eaten away slower (Stone, Cobble, Brick, etc)
-Organic materials are eaten away faster (wood, dirt, clay, etc)
-Entities (Players, Mobs, Boats, etc) are dealt an increasing amount of damage the longer they are in Acid, starting with maybe half a heart every second for the first four seconds, then every two seconds past that scaling up the damage by half a heart per second.
-Damage effect reduced by armor, but armor takes 10x normal wear from damage caused by Acid.
-Flows like water, with the same physics.
-Cannot create more Source Blocks, what spawns (or is spawned in) is what there is, like Lava.
-If a 'block' of Acid becomes surrounded on 2 or more sides by Water, it is diluted and rendered harmless, becoming Water.
-Acid flow stops when it contacts Lava, it does not douse the Lava.
-Eats through most materials (blocks) after 10 minutes. Blocks eaten slower take 20 minutes, blocks eaten faster take 5 minutes.

Spawning In the Surface World::
-Elevation 0 though 62 can have pools of Acid, leaving the possibility of acid pools on the surface.
-Spawns in pools.
-Pools of Acid spawn surrounded by Obsidian below and around, not above, to contain it but allow you to stupidly dig down into it and fall in.

Spawning in the Nether::
-All Elevations valid.
-Increased spawn occurance as compared to the Surface.
-Spawns in pools.
-Not surrounded by anything special, since it can't eat through Nether materials. This will make digging throug the Nether much more risky, as you could run into a pocket of Acid as you dig your tunnels.

Purpose and Uses::
-Can be moved in Buckets, but the 'Bucket of Acid' item will deteriorate and get destroyed after 20 minutes, so you have to move it quickly to where you want it, you can't store it in chests or anything for later.
-Can be poured out of buckets like Water, rain acid over a wall onto your enemies!
-Can be crafted while in a bucket with tools/weapons to make tools/weapons that apply a poisoning effect when they strike.
-Can be crafted while in a bucket with 8 arrows around it to make 8 poison-tipped arrows.
-Many creative uses for traps and devices.
-Adds more danger to mining in the world, and more so in the Nether.

That's my mod idea for the contest, and I've actually been wishing to see an Acid mod for a long time now, all the way back to Alpha, so I hope someone makes it~

I'd make it myself but I can't code for crap ;)