Improving bad soil with marsh compost

Hi all,

We've had to dig a channel in a wet grassy marshland recently, the soil is mostly very fine roots, thick dark brown/black mud and straw like grasses (see pic) and we have a lot of the mud/plant matter in a pile now

On the same farm we have an area which has very poor soil (a few dry, scraggly grass shoots and hard compressed clay / sand) - see other pic. I have dug a swale above it, which should hopefully help with water retention of the patch.

Since there is so much composting mud material it would seem to make sense to use it to improve the sand for growing plants / vegetables

Would it be best to use this material as a (dry or wet) mulch on top of the existing sand for planting in, or dig up a section of the existing soil and mix the marsh soil in? Or compost it further before using?

Any other suggestions will be greatly appreciated.

I think it will retain more water if it's placed in a solid layer a few inches (6-9 inches) beneath a covering of the sandy soil. On the surface, it will dry out in the sun. Sandy soil on top would bear the brunt of solar and wind drying. It doesn't wick well, so could become quite dry on top while protecting the muck layer from sun and from being eroded by heavy rain.