Alas, the true tale of caterpillar fungus, Cordyceps sinensis is perhaps not quite so lurid:
Chongcao in Chinese. This is a big cash crop for the Tibetan herders. Downside is that with Tibet being increasingly accessable, Chinese have come in and there is over gathering. In the delicate Tibetan ecosystem with little topsoil, digging out the fungus is causing damage.
Interestingly enough, Tibetan buddhist monks do not harvest these things as believe it is a living creature.
Used a lot in Chinese medicine. Also very popular in soups in the winter. Makes good soup. The chongcao themselves are a little bitter but edible.