I always thought the issue with the tentacles was that these "peaceful" creatures who always had to run away were starting to get quite good damage for their HD.
Speaking of running away, shouldn't we make the ink cloud luminescent? And the octopus?
Its skin has a bioluminescent pigment that it manipulates with great facility. Thus, in the absolute darkness of the ocean’sdepths, it appears as a floating; shifting arrangement of greenish lights. Under sunlike illumination, it can be seen that the deep-dweller has a whiter skin and larger body sac than its shallow-dwelling relative. Its illuminating pigment aside, a deep-dwelling octopus possesses no ability to camouflage itself.
A common ploy is for the octopi to approach their victims from above, having "turned off" their luminescence. In such cases characters take a -2 penalty to their surprise rolls.
Typically, they emit a burst of glowing ink (sepia), turn off their own luminescence, and flee the area. At short range, the cloud obscures vision; at long range, it may be mistaken for an actual deep-dwelling octopus. Furthermore, the cloud of ink is naturally cohesive. Characters or objects caught in the cloud (all within a 10’ sphere must save vs. breath weapon at -2 to avoid) continue to glow for 4d4 hours; the effect is similar to a faerie fire spell.
Maybe turning off the light grants a Hide bonus in low-light conditions?
Yeah, I supposed "turning off the lights" in the ocean depths would grant them the usual benefits of darkness. Speaking of which, I see I neglected to give them darkvision. Fixed.
I'd change "Naturally Luminescent" to "Bioluminescent", but other than that it looks good.
We also need to add the faerie fire side effect of the ink.
While it is a standard ability of Magical Beasts, giving them darkvision does rather undermine their bio-lights, since they can see perfectly well without their glow on. I decided to cut it out in my take on the creature.