I Was working on a similar project last night, and the most realistic result, was using SW Blobby surface particles, wich are emitted from a emitter connected to the back of the bullet. It certainly give the right look, but I haven't yet found a way to make the trail fade away.
I used a Blinn material with transparency set to full, and refraction set to 1.5.
It looks like the right stuff, but I'm unable to make the particles fade away.
I tried to apply a ramp to the refraction index, but this is not useful, because the shader is per-particle, and not along the entire blobby surface.
One way to do it would be setting the matte opacity on a per-particle level, and render out just the particles, and then compose them back into the final animation.
This is the closest I've got to the "real deal" but it is quite fiddely and time consuming. If anyone have a tip on how to set the refraction index on a per-particle basis or how to make a shader stretch across the entire blobby surface, and not just a single particle, please let me know!