Edward went out to uncover the grill tonight and found this caterpillar. We'd never seen anything like it before. Looks like a moving hairball. Glad we didn't try to pick it up or pet it before we hit google.
It is a Puss Caterpillar (or asp caterpillar) and it is DANGEROUS:
The 'fur' of the larva contains venomous spines that cause extremely painful reactions in human skin upon contact. The reactions are sometimes localized to the affected area but are often very severe, radiating up a limb and causing burning, swelling, nausea, headache, abdominal distress, rashes, blisters, and sometimes chest pain, numbness, or difficulty breathing. Additionally, it is not unusual to find sweating from the welts or hives at the site of the sting. (from wikepedia)
So - we got a lesson today. Good that Lucy and Mabel know not to go near these little guys.