Drywall mud is also called drywall compound or joint compound.  It is a mix of lime and some polymers, and comes pre-mixed and as a mix-it-yourself dry powder that is used to cover nail holes, dents and tears in the surface of drywall (also called sheetrock in the U.S.).  The pre-mixed type tends to be more 'forgiving' than the other form. 

The regular form (not lightweight) is fine for use with papier mache.  While the lightweight forms are fine for walls, I find them very difficult to use with papier mache.

Depending on how well your papier mache form has been finished, it can take from one to four coats or more to provide a smooth finish, but it can be sanded very nicely.

I have always used a latex or acrylic primer coat (in the U.S., Kilz is a good one) between the sanded drywall compound and the decorative finish painting, as I don't like the way the drywall compound absorbs the paint.

Sue