Kill the shrooms outside pioneers colony, you're gonna be there for a few hours possibly, so get comfy. ...
Getting comfy is an understatement. Please see final comment.
If you're doing it right the blue mushrooms will increase in rank ( I think one is called guard, the next one(s) are called lieutenants, captains, ect).
Guard, Captain, who knows (see below).
After an extensive amount fo time the mushroom king will spawn roughly in the same area you're in. ... Hope this helps and good luck! This one requires a lot of patience!
More patience than Job apparently. Made an alt and stayed in the area for over 4 hours. Went from level 2 to 10 during this time just killing the shrooms. Got 3 guards to spawn and 2 captains. This took about 2 and a half hours. Had to head back into the ville and go get rid of the pot of coffee. Didn't get one spawn of guard or captain, or anything else after this even though I was now one hitting the shrooms. I picked up a quest from the guy you report into in the pioneer colony so I could see the spawns on the mini-map. There were a couple of places where the mini-map should a spawn, but nothing was there. I am inclined to think that the spawns shown on the mini-map spawned below ground, like when a kill disappears or when you zone in some place and find yourself falling to your death.