Trim the octopus: Cut off the head just above the mouthpiece and discard. Remove the beaklike mouthpiece and cartilage. Cut the octopus into 8 pieces. Place in a medium pot with the bay leaves, thyme, black peppercorns, garlic clove, ½ cup olive oil and red wine. Cover the pot and simmer the octopus until tender but not stringy. This can take anywhere between 35 and 50 minutes, depending on the size and provenance of the octopus. Musk octopus will take less time.
When the octopus is done, remove from the pot and cut into bite-size chunks. Reserve the pot juices.
Heat another quarter cup of olive oil and cook the onion, fennel and garlic until soft, about 10 minutes over medium-low heat. Add the rice and toss to coat in the oil. Add a ladle full of the hot stock and stir. When the rice has absorbed this, add another ladle full. After three ladlesful of stock add the ouzo. Let the alcohol cook off. Keep adding the stock in increments until the rice is cooked but al dente. About 7-8 minutes before removing the rice from the heat, add the octopus pieces and about a half a cup of its pot juices, enough to give the rice a nice pink color. Stir in the chopped fennel or dill fronds. Season to taste with salt and pepper. Serve, garnished with pink peppercorns.