I'm pretty sure it's glue. Blown in cellulose is far from fluff and light in this application. I've got it in every wall in my house (interiors as well as exteriors), and it's rigid. I've got an area inside the cabinet that houses my water softener that has the 3 valves used to divert the house supply around the softener - sheetrocking around the valves would have been a pain, so I left it open. 10+ years after installation and the cellulose is still firm.
Insulation works by controlling heat or cold migration, and airflow. The small pockets of air separated by insulating material limits heat/cold flow. Blown in cellulose packs all the gaps around and behind outlet boxes - places typical batt insulation misses - this cuts down on drafts.
As far as adding more water to the walls - the cellulose must dry fully before covering it up. This is especially true in parts of the country where a vapor barrier is required - we need no such thing in Houston. My walls were done in June, which in Houston is hot, and it still took nearly a week for the cellulose to dry enough to put the balance of the sheetrock up.
As for cellulose in the attic - that's definitely light and fluffy. I've got about 12" up there, and I'd NEVER do that again. The house is tightly sealed - new windows, housewrap, etc. The rooms that have ventilation - kitchen, bathrooms, are ALWAYS dusty. The dust is the color of the cellulose. I have NO idea where it comes from - the recessed lights pass the white-glove test, as do the A/C registers. There's dust elsewhere in the house, but it's worst in the 2 baths and in the kitchen.
