Here's how I would have done it.
RigaMortus2 said:
The Dolgaunt uses it's tentacle to grapple a PC that is 10 feet away.
The dolgaunt cannot use its tentacles to grapple, because it lacks the appropriate special ability (Improved Grab (Ex): On an successful attack with a tentacle, etc...).
Similarly, a PC wielding a longspear cannot grapple at 10' range.
Also, normally when you grapple you move into the opponents square. Given the situation, I ruled that the DolGaunt used it's tentacle to instead pull the PC into it's square. So now we have a PC in a grapple with a Dolgaunt.
I'd've had them meet halfway, if I didnt have the dolgaunt move into the PC's square. The problem you encounter, by ruling as you did, is that anyone threatening someone who is grappling gains an AoO for that creature's movement.
SRD said:
Moving, as normal, provokes attacks of opportunity from threatening opponents, but not from your target.
Note that the ability to pull an opponent into your own square, rather than moving into his, is a benefit of the improved grab special ability:
SRD said:
When a creature gets a hold after an improved grab attack, it pulls the opponent into its space.
Okay, so the PC is in a grapple with the Dolgaunt, however erroneously he got there...
1) How is the opponent grappled? Does the Dolgaunt use both tentacles or just one tentacle to maintain the grapple?
The dolgaunt uses its entire body - tentacles, hands, feet, legs, etc. - to maintain the grapple.
2) Can the Dolgaunt then use it's regular arms to maintain the grapple (even though it's not represented as having any other attacks besides tentacles in the stat block)? Can it use it's regular arms deal damage while the tentacle(s) continue to grapple.
It is using it's regular arms to maintain the grapple. It's regular arms can deal damage the same way any other grappled creature can use its arms while grappled: to make an opposed grapple check, to attack with a natural or light weapon (at a -4 penalty), or to draw a magic item.
3) If another PC approaches the Dolgaunt, and thus would move through it's 10 ft. of reach, would the Dolgaunt get to make an AoO on the PC, or would both it's tentacles be busy in the grapple? This goes back to question # 1.
Tentacles are busy.
4) What if this was a Giant or a Collosal humanoid like a Titan. If a creature is so big that it could pick you up in one hand, when it grapples you, can it grapple you using just one hand (leaving the other hand free to attack others) or does it still require you to grapple with both?
The rule is that creatures with Improved Grab may voluntarily take a -20 penalty to their grapple checks for a round and consider themselves ungrappled - thus, they'd threaten an area, could full-attack normally, etc.
Some people house rule this to state that any creature who is grappling may take the penalty and remain ungrappled.
Otherwise, you use all of your available bulk, limbs, etc., to grapple a single opponent.
5) Are there any rules anywhere which states how many arms (or other limbs) you need to use to maintain a grapple? How would a Thri-kreen grapple? Would it have to use all 4 arms? How about a Giant Octopus?
All of them. Unless you take the -20 penalty, in which case you only use the limb which started the grapple to begin with.
Thus, a giant octopus which does not take the -20 penalty is assumed to be wrapping all of its arms around its victim. Should it wish to wrap a single arm around a creature, and use its remaining 7 against other threats, it would be at a -20 penalty on the grapple check with its single arm to constrict.
Should it then decide to try an improved grab with any of those attacks, it will still be at a -20 penalty.