I've never noticed any kind of smell, once the carpet is covered with mulch. I've even used *ick* carpet that was obviously "doggied up" and smelled dreadful. Once the mulch is on it, the smell is gone. I think the bacteria/fungi in the natural mulch neutralize any odors. And as it rots, it simply "composts"...the fully rotted carpet is like any other compost. A plus to carpeting over landscape cloth is that it's not slippery. I've tried using some plastic based weed suppression stuff under mulch and usually especially when wet, it is very slippery to walk on or if on a hill, the mulch slides down it. Carpet's texture holds it in place.
