Wadding !!!!! it looks like more fiber glass type blond wigish.At the moment only the back box seem to be losing the wadding.I have a 150 mls+ round trip to wim on monday so hope no other problems come about 
It is fibre glass, it is used to absorb the noise coming from the exhaust, it is packed around perforated tubes and these tubes corrode very easily, usualy in the back box first as this where there tends to be more condensation.
As these tubes break down the fibre glass wadding gets pulled in to the exhaust stream and can appear out of the tail pipe.
If this is happening in the back box (which is most likely) it is a reminder that the box is on its way out ,apart from that it should cause no other problems. If however, the wadding is coming from a middle box this could then cause a blockage in the back box which could lead to running problems and even cause the engine to cut out or stop running altogether 
Does something needs to be replaced when you see some blonde wigish fibers (you guys called it wagging) coming out of your exhaust pipe? What will happen if you ignored that case?
Filth_Mobile_Jim: LOL. That is really funny to have a cat roasted inside! Maybe she was influence by the comercial of subaru it sucks the pigeon then feathers coming out of its tail pipe. I hope youve seen that on you tube.
