Perhaps I should first make my case that some people love dung. They don't fall in love with it, of course, but they value it highly. Cow dung is used as a building material and as something to burn. People who regard cows as sacred also value cow dung. In the BBC series "Extreme Pilgrim," Pete Owen-Jones is brought gifts of cow dung to burn by Hindu villagers who regard him as a holy man. It doesn't smell bad, he reports, and it is meant as a respectful gift. So I think it isn't too much of a stretch to say that some people might love cow dung, at least as much as anyone might love any natural material that they work with (and perhaps more, given the religious aspect).
Carter's point is to get across a distinction made by Gaita, a distinction between conceptual or grammatical claims (such as "one cannot love evil") and merely factual claims (such as "one cannot love cow dung"). The latter, not the former, are supposed to relate to our form of life. In Carter's view, "the central question to ask of all Wittgensteinian moral philosophy" is "Why do there exist no moral "mere facts," defining our form of life?"
I'm not sure about any of this, partly because I'm not sure what kind of love is involved in each case. People can relish evil. Does that count? Think, for instance, of the young Augustine delighting in stealing, or some kinds of sadism (the kind where part of the goal is to be as bad, or bad-ass, as possible). It would be hard to love all evil, especially evil done to you, but it can be hard to love all good too. No one loves paying their debts. Still, I think I agree with Gaita on this. Evil means bad, to love is to see as good, and good is the opposite of bad, hence you cannot love evil. Loving dung is not like this. It's an accident (of sorts) that we don't like its smell or taste.
So Carter's question might mean: is there anything morally good or bad that is accidentally so? Could ethics be empirical? Could it turn out that this or that was right or wrong? And I think the answer to that has to be No, although I'm not sure why. Certainly it could turn out that something had been a bad idea, but this wouldn't be a moral failing in itself.
(Chris Ofili uses elephant dung in his paintings. I don't know whether he loves it, but it seems possible that he might.)