My favorite KTU of all time was the 237B, which was originally designed for the add-on conference feature. It offered operation by using a non-locking line key to bridge two preset CO lines together. This non-locking key provided that 'toggle' functionality that you're seeking. The relay contacts on the KTU could be used for anything, not just conferencing lines. I used to use them for providing a one-touch 'night' button that would cause the 237B to activate a slave relay, placing a short on all of the CO lines in the system to force them to hunt (as busy), except the last one (Centrex), which had CFNA to a remote location.
It was also mighty handy for just a regular night bell throw switch that could be activated/deactivated by any station with that particular line key wired to it and unlocked. It offered plenty of separate contact closures so that T/R and lamp control could be accommodated for just about anything.
With that said, you could certainly use the 237B to toggle the mute function on and off using spare pairs in the line cord. To avoid imbalance hum, you'd need to use a full pair to and from the transmitter when placing the short across it. Otherwise, hum or bleed-through may occur if using split pairs (spares). Being a rack-mounted KTU, it obviously won't fit inside the set, however Mike Sandman offers some tiny relay concoctions that you can fit inside of a set.
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