"I really think a lot has to do with hands and the environment that encourages a progression of tool usage. On land you have clubs, fire, spears, etc. In water, it is hard for me to see a progression of benefiicial tools. About all there is to do, is prod (ability is oft repeated in nature), and build nests (ditto)."

I know what you mean by "hands" the octopi's tentacles may actually be better appendages than human hands their abilty to grasp turn twist and otherwise control an object as well as having more than two makes them suitable for tecnological development.

How often have you wished when doing a job that you had more than two arms?

To address the fire problem.

Since fragments of iron can be found on the ocean floor and because of the Earth's natural magnetic field there is no reason why octopi could not eventually discover electricity and get around the problem of short circuiting through the salty ocean water one way would be to purify the water which actually makes a nice insulator, it's true, pure water is not a good conductor of electricity.

Then electrolosis as we know a lot of metal is smelted using electric furnaces but once the gases like oxygen hydrogen and acetelyne are discovered those torches burn underwater.

Then there is a great deal of geothermal energy to be tapped as well.

Once we get around the false idea that you can't have fire underwater therefore you can't have technological progression a whole new world of possibilities opens up.

There is another great Sci Fi theme for a book.

After the humans won the war with the octipi a lone military commander stood on the beach and shook his finger at the leader of the octopi duly warning them to stay in the oceans and not interfere in the affairs of man the octopi leader turned away in humiliation and slithered beneath the oceans waves swearing an oath to the God that made the world to be dominated by the water that the land creatures would not prevail in the end.