I use sand. Been using it for over 40 years. East coast, west coast. Coarse sand, river sand. For heavy clay loam, add about 1.5 inches of sand on top and till it in as deep as possible. Remember, all loam soils already have some sand in them. So you might not need to add as much as you think. Once you've amended your soil with sand, it's permanent. You can add some humus by top-dressing or mulching every year, but you will need a lot less compost for that than if you were amending the top 8 inches of soil every year. So the sand is a lot of work at the front end, but it saves you a lot of work every year thereafter. Then I rake the soil up into raised beds. I don't use any retaining structure. By the time I'm done, I've got at least 10-12 inches of well-aerated loam soil. Everything grows like mad in this stuff. Once the winter rains hit the soil, and then it dries the next summer, you might decide that it's still a little too stiff. Add some more sand. Or mulch with sand; that works really well. On heavily leached acidic soils, it's also a good idea to add lime. I prefer dolomite lime, because it has Magnesium as well as Calcium. If you have pure, impenetrable clay (which I call subsoil clay) , you're done for. Often this stuff will smell like methane when you disturb it. I recommend that you replace it with good topsoil, or pile good topsoil on top of it. If your native soil will grow healthy weeds and grass, you should be able to amend it with sand. If not, you need to truck in some soil. All of my experience is in areas with high rainfall and heavily leached acid soils on the east and west coasts of the US. So I don't know if sand will work in other situations. I do know that rock gardeners and rare bulb growers use sand extensively for growing beds in the entire northern tier of the USA. My experience is with very rare, difficult plants. They will thrive in prepared soil with added sand; most will do very poorly in heavy clay loam. Believe me, if this didn't work, I would have given it up a long time ago. If you have a big area, you will probably need to buy a dumptruck load of sand, and rent a little tractor with a bucket and tiller. Otherwise you are going to get the workout of your life. For the science behind this, google "soil triangle". It's pretty simple, really. Add some sand, get loam. Add more sand, get sandy loam. In my opinion, sandy loam is garden heaven for a wide range of plants. A few plants prefer a heavier soil, but most gardeners grow a lot of different things. Sandy loam warms up earlier, is easier to weed (they pull right out), doesn't stick to your shoes, doesn't compact, is well aerated, and gives amazing seed germination. My rare plants reseed themselves all over the place. I never saw that with clay loam. I like a humusy organic soil as much as anybody. But I don't have time to amend my soil with humus every year for the rest of my life. What are you going to do when you get old (like me)? Just add the sand now and enjoy. Skeptical? Worried? Buy a bag or two of sand at Home Depot. Dig it into a small area and see if it works for you. But make sure that your clay loam is in a tillable condition, or you are going to end up with an awful mess. It can't be too wet or too dry. I've never used peat moss to improve garden soil. Too expensive, too temporary, no nutrients. I use it in potting mixes. This post was edited by lilydude on Tue, Apr 22, 14 at 21:55

Thanks for the suggestions everyone. I am guilty of trying to reinvent the wheel sometimes. I am planning to grow native fruit trees, so I don't think that pests will harm them too much. These will be the little wild plums that grow on roadsides. I was hoping to plant this orchard and no longer mow that area of the yard, but maybe that isn't feasible. I like trees and stuff more than I like grass, and I mow several acres - I just want to mow less! I think I will grow in mulch circles and sow grass and clover together after tilling the site. That seems to be the general consensus here - that growing in sod is easiest, but that a cover crop like clover is worth pursuing too. I keep bees, so pollination won't be a problem I think. @CanadianPlant: I am familiar with sheet mulching, and I like it. However, this will be a pretty large area to try that. I tried to smother the lawn in one area with cardboard, a little compost, and then 3-4 inches of mulch on top - the Bermuda grass just burst through all of that. This experience has made me a little gun shy about smothering the lawn.

I can't directly say whether the camphor mulch will be problematic for you, but if it is going in around existing larger plants, it probably won't be a problem. If you are intending to plant new plantings from small sizes within the area to be mulched, you might get some alleopathic effects on the establishment of the new plants, but less so if they are drip irrigated rather than spray irrigated. As to a walk on ground cover to replace the lawn, one of my personal favorites is Dymondia margaritae. If it doesn't need to handle regular foot traffic, Myoporum parvifolium 'Dwarf Pink Form' is also a fast growing, low height and rather drought tolerant choice that is also good at smothering out weeds. Chamomile and Creeping Thyme in my opinion are better for smaller areas, and not as reliable to replace a larger lawn area without more time/effort spent on regular weeding. You might also consider replacing the lawn with a walk-on meadow using Carex praegacilis or Buffalo Grass.

GeeDavey~ yes, the fines seem to decay a bit quicker than regular hardwood mulch, and that's ok by me. The only drawback is that I have to apply more bags of the fines to get the same coverage that I did with heavier hardwood mulch - you'd need, at the very least, 3 inches of fines or it'll wash away in the first heavy rain you have. One bag of fines doesn't give you much coverage when you're piling it on to a depth of 3 inches. However, the fines cost me nearly 2 dollars less per bag than the heavier mulch. So it kinda evens out. The product I buy is sold at a local nursery and is simply called 'soil conditioner', with the main ingredient listed as composted pine bark fines. Besides its use as a mulch or top dressing, you can mix it into the soil when you're digging new planting holes, which is something that isn't possible with traditional hardwood mulch. Another bonus is its natural dark color, which blends in nicely, and it smells really good, too. So far I'm happy with it.