The Virtual Toothpaste was an early Virtual Reality demo I did at Sun using the system described in High Resolution Virtual Reality. The idea was that the tip of the 3D mouse was a virtual tube to toothpaste, and as one moved the 3D mouse around in space a thin tube of 3D toothpaste would be left behind. This demo was very popular, and showed off how good calibration between the headtracking, wand-tip tracking, and the stereo display was. Advanced features allowed the thickness of the toothpaste and elliptical cross section to be varied as extrusion was happening. This allowed quite a verity of organic shapes to be rapidly drawn.
There were no specific publications on Virtual Toothpaste per-say, but it was described in the High Resolution Virtual Reality SIGGRAPH paper, and eventually became a tool mode available in HoloSketch.