I like the deck, its got some nice combo potential in it. There are some changes I'd make though. I'd remove "Cryptborn Horror" and "Horror of the Dim". My experience with "Cryptborn Horror" is that it's generally good when you're doing well already, but does little to change the board state in your favor if you're behind. "Horror of the Dim" is just a 3/4 with conditional hexproof, not particularly high on my priority list for kill spells unless you pump it. In their place, consider "Nighthowler", a card I think has a little more synergy with your deck. Another copy of "Mirko Vosk, Mind Drinker" might be warranted, considering its synergy with the first activated ability of "Duskmantle Guildmage". "Door of Destinies" seems out of place, considering you're only running 9 Horrors at the moment. "Crypt Incursion" and "Wight of Precinct Six" seem at odds with each other, more so if you choose to run "Nighthowler". Consider dropping or sideboarding "Crypt Incursion". "Artificer's Hex" seems kind of slow to me, I would generally prefer to run "Doom Blade" or "Hero's Downfall", though it may be worthwhile depending on your local metagame. Not sure what "Quicken" is in for since you're running only 6 sorceries, other than to just thin your deck a little. Some other cards to consider if you're willing to drop some cash are "Ashiok, Nightmare Weaver", "Desecration Demon", "Thoughtseize", and "Phenax, God of Deception". Good luck with the deck.
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Looks like a good start. Personally, I feel "Heartmender" is kind of slow for its job and would prefer to run "Quillspike". I'd also think about running a little mana acceleration. Maybe "Devoted Druid", since it combos well with "Quillspike". I don't feel that "Elixir of Immortality" adds anything important to your deck, since you have better lifegain with "Kitchen Finks" and without card draw putting cards back into your library only matters against mill decks. I'd put in another sac outlet to exploit your persist creatures with "Quillspike". Cards like "Ashnod's Altar","Birthing Pod", "Carnage Altar", etc., though if you run "Birthing Pod" keep "Heartmender" in so that you can sac it to find "Mycoloth". You should also consider running "Overwhelming Stampede" as a potential win condition with your "Mycoloth". I'd also consider at least sideboarding protection for your important creatures against removal decks. Something like "Ranger's Guile" or "Alpha Authority" against spot removal, or "Mortal's Resolve" or "Withstand Death" against board wipe destruction.
Yeah, I suppose I should rename the deck and change the tags. What you're describing is the classic reanimator deck that drops a fatty in the graveyard, then reanimates it. If that was my goal, I would pretty much follow the exact plan you've described. The goal of this deck is to abuse Geralf's Messenger's enter the battlefield trigger and undying multiple times using a sacrifice ability (Ashnod's Altar) and cheap reanimation (Unearth) to both make my opponent lose life and generate a lot of colorless mana for a big X spell (Profane Command). If I can reanimate Geralf's Messenger multiple times in a single turn, I can generate a lot more mana and do a lot more damage. Hence, the mana cost of my reanimate spell is pretty important. Dread Return is far too expensive, and the likelihood of my having three creatures that I am willing to sacrifice is low. Exhume costs only one more colorless mana than Unearth, but I don't feel it gives any benefit in this deck besides the ability to reanimate Gray Merchant. I'd consider running Reanimate, but I generally try to keep the $$ cost of my decks as low as possible, especially since I'm designing for a friend.
The only real target for reanimation in this deck is Geralf's Messenger, so Unearth fits perfectly. Exhume has drawbacks, Dread Return and Sheoldred are too slow. Buried Alive is a good idea though, to find Geralf's Messenger. If I really need to reanimate Gray Merchant, I can probably do it with Profane Command.
I have an attempt at such a deck using populate(in green/white instead of mono-blue), though I don't feel it turned out as elegant as this deck design and certainly is not a budget deck. I could drop Trostani, the scry land, and the artifact lands and it would be significantly closer to being a budget deck. It also doesn't make use of proliferate, hard to include it without blue mana. http://www.mtgvault.com/babyseal/decks/populous-titans/
I would suggest adding Gray Merchant of Asphodel, especially if you can drop it after getting Geralf's Messenger out. Not sure what to remove, maybe the Dread Slavers.
Nice deck, I love the use of Titan Forge. I noticed a lot of your cards are colorless, have you considered running Urzatron? Or Twelvepost if you're willing to go Legacy instead of Modern.
I've found it's especially fun against my friend's mono black devotion deck. Shuts down Geralf's Messenger and Gray Merchant of Asphodel.
Yup, hence the expensive tag.
Thanks for the comments. I like the suggestion of "Reckless Waif", but I think I'll try reducing "Instigator Gang" and "Mondronen Shaman" by one each instead. You're right on "Caravan Vigil", so I replaced it with "Brimstone Volley" for removal and swapped some basic lands for "Rootbound Crag". I would run "Infiltration Lens", but I made an arbitrary decision to stick to Innistrad block and Magic 2013. I'll try "Dangerous Wager" instead if I need card draw.