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Jack everything you're describing to me sounds like the hay possibly has mycelium growing on it and while PWM is a fungal culture Mycelium in and of itself can be very very beneficial to plants/trees.
The Mycelium will grow throughout the same substrate the roots also colonize and create a symbiotic relationship with the roots themselves, while mycelium itself is started with other mediums hay is a much loved substrate to colonize after the mycelium has been birthed.
By using a layer of hay beneath your trees you've given the mycelium that was either spores lying dormant in wait or living mycelium beneath the hay previously a nice secondary substrate to grow through before expanding into the substrate your roots have begun colonizing.
I'm not going to pretend to know all the names of the different ways the relationship is symbiotic ;but I have recently been researching this topic a lot and can say for sure it's not just beneficial for one or 2 little things. I can't say that every strain of mycelium is going to be equally as beneficial obviously or even beneficial at all, some fungus (mycelium fruits fungus/mushrooms) like PWM use the plants themselves for hosts as mycelium itself does actually consume food rather than absorb nutrients through roots like plants ;but only certain types are threats to plants/trees.
Chances are the Mycelium you seen on the hay would take a very very long time (many seasons) to reach the top layer ;but if it does it could very well start fruiting some mushrooms annually if that's the type of mycelium you seen (not all types produce mushrooms of course). Many strains of mycelium have a natural fruiting time in Oct./ Nov. and also really thrives at that time of year so it makes sense for the time of year you seen it, which is another part of what you said that makes me feel it wasn't PWM at all.

"I spread hay down first before I mulched around the bottom of the trees. The hay I used has white powdery looking stuff in the middle of it, not knowing I put it down and put mulch on top of it. It is Nov 13th here in Wisconsin and cold out"

PWM wouldn't be living on hay at that time of year outside ;but mycelium definitely could! Laying down mulch on top of the hay is an interesting touch as many beneficial mycelium species really love wood as well!
Anyways I know my reply is very late ;but hope you still find some useful information here and if you enjoy gardening at any level I highly recommend further investigating yourself as mycology is a very interesting hobby to get into.

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