We'll focus on the physics of how a gas 'block' works first.
Gas works almost exactly like a liquid. However instead of flowing downwards, it floats upwards. Otherwise it works pretty much the same as water does now in terms of movement.
To prevent leaks of gas stretching infinitely up into the sky however, we will make it so that after a few blocks (perhaps 10) of flowing vertically upward, if it encounters no obstacles, it will disperse into the air. This means that if gas pockets are exposed to the air, you will see the gas flowing upward for a few blocks from the source block, but it won't go forever into the sky and be an eyesore.
Gas works similarly to water in its interactions with the player. When the players head is inside a gas block, their vision will be partially obscured and the air meter will start to deplete. When it runs out the player will start suffocating, in the same manner as drowning. When the player leaves the gas after having run out of air, a poison effect will be applied for 5 seconds as a parting gift. The respiration enchantment will work the same in gas.
If a gas block comes into contact with: Fire, a torch (but not a redstone torch), an explosion or anything else like that, it will explode, potentially exploding all the gas around it as well. The explosion of each separate block is weak, weaker than a creeper explosion, but with large volumes of gas the explosion can be highly dangerous.
Movement through gas is unchanged from normal. You can walk, jump and mine as if standing in air.
The gas should be green and could be called "creeper gas" or something. You could scoop up a block of gas with a bottle that you can then place somewhere else or perhaps use in crafting.
Mobs are mostly unaffected by the gas. Although you really don't want to get on the bad side of a creeper near this gas.
Now two main things I'm changing from what he has said is that instead of the gas going up only 10, it goes up 12 blocks, and the other thing is it shouldn't be called Creeper Gas, I don't know what to call the gas that comes off this block yet but once I do I'll bring it up. Once the gas is extracted it can also be used in traps.
The block breaks the same way as stone, use a iron, stone, wood, or diamond pickaxe to break the block, and if it's enclosed--meaning a block is above it and up to ten blocks up, you can capture the gas in a glass bottle by right clicking it. 11 and more blocks, the gas vanishes. Also these Toxic Blocks spawn as Iron Ore would spawn.
Im confused...so the gas comes from a specific solid block? Not just a source gas block?
You mean like a mob spawner? It works better this way if it comes from a specific solid block unless you can tell me how it would work better coming from a source block.
A side thing I've come up with is the look of this block is like stone only with a crater in the center of each side and from there emits the gas, but it's safe until you break it. It's also slightly luminescent
I can see it looking nicer having a solid source block, but then when you break it can you capture the gas anywhere from the stream of gas or just the first block like with a stream of water?
Upon breaking the block, the source block that is expose floats up, up to 10 blocks, and if there is a ceiling at 10 blocks up you can catch it, but if there is air 11 blocks up and higher it vanishes after it reaches that 11th block. It can still poison you as state in the OP as well as explode as stated above so be careful when trying to get it with a glass bottle.