flayvurdfun: That's Perma Ice. Yeah, it's pretty much just plaster; Country Kitchen sells it. Once it's dried, its waterproof/greaseproof, and you can just wash them clean.
Usually with icings the sugar level is high enough to retard the growth of mold. It's not unlike how honey doesn't mold.
Aha! I just went poking; courtesy of http://www.lsu.edu/horticulture/4051/4051NOTE.htm
: "Sugar - increased osmotic pressure (tends to dehydrate microorganisms) >70% sugar inhibits most microorganism" ie jelly, jam, marmalades, etc.
In other words, a substance with a high sugar content has a tendency to bind the water and moisture from the fats in such a way that it's unavailable for molds, yeasts, and bacteria to utilize. Ever notice that the wetter the food, the faster it molds? Graham crackers, saltines, croutons, etc almost never mold; there's not enough water.
Anyway, many bakeries do use real icing to decorate their dummies, and that's why. It won't mold under normal circumstances. Ants and bugs, on the other hand... *shudders*