This kind of obsidian dust drops from mobs (dark room/cursed earth).

So the fix in my opinion should be same as with sulfur, a conversion recipe:

Pulverised obsidian seems to not exist in 1.2.1.

Pulverized obsidian is a rarer mob drop and I received a request to fix it, so it's actually fixed in cf56665 (zzzFixStuff.zs:121)