Apparently Mold Touch can be undead! It counts as a magical disease. That removes any lingering druid-doubts about the morality of using this spell. So what if my party member's undead summons die quicker - they're unnatural anyway. I noticed that enemy undead became diseased, but I didn't see that they took damage. However, I noticed that my undead summons died from the mold, so I assume it works on enemies...

Unfortunately, Charmed creatures turn hostile once they take damage from Mold Touch. The damage caused is attributed to the character that cast the MT, and that does not make charmed creatures very happy.

It's still useful to cast MT on Charmed creatures, however. I used a Charm in the middle of a fight, had the subject move in front of my party, cast MT on it, and walked it into the middle of my attackers, who promptly attacked it and were affected by the mold.