You are also correct, to be wary about running a backhoe (or excavator) where wet sand is flowing into the cut.
I have excavated numerous test pits on my property to evaluate some future pond sites. In two, I got down to a major layer of water-logged sand and gravel. I kept digging because I wanted to measure the depth to the underlying clay layer below. However, I couldn't make it any deeper as the wet sand just flowed right out of the vertical walls of my cut.
The overlying soil was very cohesive loam and clay loam. Eventually I undermined the sand layer enough that my surface ground started collapsing outside of my cut! So yes, be very careful when digging in that type of situation - once a collapse starts, things can go badly VERY quickly.
