Ken, I've had new orchids arrive from Carter & Holmes in a wood chip medium. It says on their supply page that it's "Cypress wood blend" and has small shreds of wood chip and perlite in it. Here's the page with a picture of what it looks like:
http://www.carterandholmes.com...
Seems like the wood is ok, so you could try your cypress mulch, but I'd wash it with the hose, and let it dry in the sun before potting up orchids in it.
