Honestly I'd skip the mud and just add more LR anywhere you can (in the sump and DT). Also, remove your sock. You won't have crystal clear water but the sock is catching pods as they go through the system. If you add chaeto to the skimmer section (using the baffle) it may float up and bits get caught in the skimmer. I use a piece of plastic canvas along the edge of my fuge to prevent chaeto from getting into my return.
If you truly want a refugium is it possible to rebuild your sump? When I built mine I put the refugium on the left side, return in the middle, drain & skimmer in the same section on the right. Flow to the fuge is from a tee off the return, with a ball valve. It can be turned off for cleaning, harvesting chaeto, etc. and because it's to the side and not the middle I was able to make it quite tall and as wide as possible (here's a pic right after it was set up:
http://imgur.com/pf7PkPw). Just a thought. You'd also regain some of that head pressure you're losing by your return having to travel so far.
I'm successfully keeping a healthy male blue mandarin in a 65g but I built the tank with that goal in mind - as large a fuge as possible for a small sump, a rock wall that covers the entire back of the tank, and didn't skimp on the LR in the tank itself. I don't run socks and I broadcast feed the tank frequently to feed both coral and pods. My mandarin also eats planaria which is handy.

I bought him from a LFS that has a large copper-treated system where a lot of the fish are in tiny open-topped compartments. He'd been there for about 10 days and was a little skinny but was still trying to jump out of his prison, so I took a chance. He didn't gain too much weight at first but he spontaneously started eating mysis and a few months later he's starting to get a little fat, even. So just look for more ways you can stack your system in a mandy's favor, there may be more you're not thinking of!
Er... All that said, I'm adding a 30g remote display fuge to my setup soon to give the mandy an even better support system. I love that little guy. I might have to lose the in-sump fuge to hold the extra water from the new tank when the return shuts off, but it would be worth it. You could maybe consider something like that too?