Canyons are inherently risky. Flash floods occur without notice on sunny days. Technical skills & surrounding topography knowledge required yet does not eliminate risk.
Less Is More...
Though Mule Canyon extends for many miles on past this 2.8 mile point, that upper portion lacks the character and drama of the lower canyon. Additionally, it is mostly overgrown with nasty, thorny things. The large waterfall blocking access to the upper portion just makes for a nice destination and logical stopping point.
Just south of Alamogordo, and directly adjacent to the small community of Oro Vista lies the Mule Canyon drainage. As with all of these frontal range canyons, the characteristics of the rock strata and vista views are substantially different from it's counterpoints. While this canyon begins as a fairly narrow defile, it rapidly opens up to a broader basin with dramatic views of the cliffs and buttes far above. There is more of a southwest feel about the settings with towering buttresses first offering glimpses, then coming into obvious prominence.
The hiking is easy, with an extremely low gradient for the first few miles. You even pass through a small riparian area early on... complete with a running spring and stand of assorted trees. The rock strata at the level of the canyon bottom appears to be volcanic in origin, dark and pitted and interestingly carved. There are some potential side canyon drainages that might make for interesting exploring, but the main drainage continues to entice with it's ever opening views up canyon.
After the first couple of miles, the character of the hiking changes. The easy passage gives way to more difficult maneuvering, with some minor scrambling up blockages. Fortunately, a route does always present itself; there is no major blockage. The hike continues in this vein, with the climbing/scrambling getting ever more challenging as you approach the major waterfall feature a bit over 2.75 miles into the canyon. This tiered falls creates a cascade blockage near to a hundred feet, and is the logical end to hiking this canyon. It is traversable around either side with a very steep scramble, but not really worth the effort unless your intent is to proceed on up to Mule Peak or the meadows surrounding that high point.
If you do make this extra effort to get above the falls, the next half mile of canyon is very nice, including a very narrow grotto area with a fun climb out the far end. If you bring along rope to rappel down the falls, then it could make for an added bit of fun to scale up to that slightly higher level.
The first few miles of this canyon hike would be very suitable for even beginner hikers, and ideal for someone just getting into a bit of rock scrambling. This upper portion might present more challenge than a beginner would desire.
Beyond that short section of canyon above the falls, the canyon broadens out and the drainage diffuses into broken meadows and thorn choked gullies. It is not worth the effort to continue up the drainage; enjoy the lower canyon areas instead.
Check out the Official Route and Triplogs.