I’m so glad you asked about this!
Okay, so I could be like ‘ninja magic mercury’ but in true Naruto pseudo-science bullshit style, let’s talk mercury as a potential ninja tool!
It’s…really not terribly useful. Mercury does dissolve other metals to create amalgams, but on its own its industrial purposes in a world like the Naruto universe would be limited to things like thermometers.
Mercury has been used IRL as a poison before, but if you’re up against all the fictional poisons in the Naruto ‘verse it’s sort of lackluster. Mercury poisoning is hardly instantaneous unless the person being poisoned has managed to eat a shitton of it.
Which leads us, of course, to Chouichi’s interesting fashion choice.
The freezing point of mercury is -38 fahrenheit or -38.89 celsius, AKA really fucking cold. As Chouichi has the Ice Release bloodline limit, the mercury he keeps on his person is indeed constantly stabilized by being frozen solid. Additionally, there is a very thin layer of ice between Chouichi’s skin and his sweet lethal body art.
(Itachi was not thrilled when this first came up. Not at all.)
So what’s the point in carrying something on your skin that is toxic to you, becomes liquid with ease, and doesn’t really do much damage to another human unless they use it as a sandwich condiment?
The decision to use mercury as a backup weapon was made during an ill-advised but mostly successful raid on one of Danzo’s old contacts. It was close quarters and standard Akimichi techniques OR Chouichi’s ice would have been really obvious and caused them problems.
So Chouichi gambled and it turned out that the mercury in his mark’s very expensive thermometer was useful after all.
Chouichi doesn’t keep his mercury on him because of its toxicity.
He keeps it on him because it can turn from solid to liquid so quickly.
(this next bit is COMPLETE Naruto pseudo-science bullshit, kids, not a bit of it would work irl I have no doubt.)
When in close quarters combat, all Chouichi has to do is lay a hand on his opponent for long enough to run his mercury off of his arms and onto his victim. To do this without poisoning himself he creates little frozen ‘bridges’ for the mercury to slide along- the stuff on top moves and the stuff below freezes, sort of creating its own conveyor belt.
Once that mercury is planted, Chouichi backs off and manipulates the water within the mercury. It finds an orifice on the victim and enters. Chouichi then freezes it.
The end result is normally death by asphyxiation.
Since this is a sort of last-ditch technique and only useful in specific situations the amount of mercury Chouichi keeps on him is very limited and he’ll do his best to keep using the same mercury over and over until he is forced to replace it.