Where is the setting to turn on clip mute icon on?
It's next to impossible to guess mute status without icon. :(
 

 

It's the greyed out clips... [I can see them from here  ]
 
After all, in previous versions if you couldn't see the start of the clip (zoomed in or using the scroll) you wouldn't see the icon anyway. So it doesn't seem like a big deal to me. But that's just my opinion.

Greyed... OK. Muted clips on armed tracks could be greyed, too. Dimmer red caused me confusion.
Clips look elegant without red icon but this is the first drawback in GUI design to me. Otherwise I'm still 1very happy X3 user.

Can muted clip colors be tweaked? I'd like to get more difference to colors.

As well as a grey waveform, muted clips have a dull header. As Freex mentioned I find that more convenient on long clips although I guess an icon in the corner as well wouldn't hurt.

Well, when the muted clip is locked (and I lock clips most of the time) it shows two icons in X2 so the removal of the mute icon in X3 is probably a good thing.

I found it extremely useful to see at a glance via the icon that a clip(s) was muted.  I for one would really like it back.
I've put a request to CW.

Yes, please make it possible to customize the color of muted clips. Sometimes it's extremely difficult to discern between a muted and an unmuted clip. The X3 way is a big step backwards, usability-wise.
 
While many things are much better in Sonar nowadays, certain parts of the usability of Sonar has taken several steps backwards in recent X versions, it's so unsatisfying...
 
Clarification: If the Edit filter is set to "Clips", it's usually relatively easy to spot a muted clip. But if it's set to something else, like any automation, it becomes very difficult as all clips turns grey and black.

I have just upgraded to X3 and missing MUTE button is very annoying. Greyed clips will not help much and editing will be harder

Even though X3 may not use it, the mute icon is BMP locked away in the main res.dll file. I hear Panu has some sort of utility that can extract these things and modify them.
 
hth