Ah, the axolotl, also known as the Mexican Walking Fish, Mexican Salamander, or Walking Fish (though they actually are salamanders, not fish).
Anyway, I think they're really cool little animals and might as well deserve their spot in Minecraft. We don't really have enough sea creatures.
Appearance: They look just like they do in real life. Axolotls are small (about the size of an ocelot kitten) with a mostly light reddish-pink body (but they have gill-crests on their head that are a darker shade of reddish-pink).
Hostility level: Neutral, passive if tamed.
Behavior: Axolotls often walk around on land, or, if in water, they'll swim. Like Guardians, they can survive for any given amount of time on land or water. However, they try to remain in water when possible. If it's daytime, they'll try to hide somewhere like water or a cave until the sun goes down. They're traditionally harmless, but if attacked/provoked, they'll attack whatever provoked it. They only do a half heart of damage each hit, however. If an axolotl is hurt, it will enchant itself with Regeneration (as reference to how real axolotls can regenerate their limbs if they lose them) and will continue enchanting themselves with this until fully healed. Axolotls can also be tamed using fish. When tamed, they no longer attack anything, and can be told to sit or stand, and won't teleport.
Biome: Axolotls are found around water.
Drops: 1-2 EXP and 0-2 Axolotl Gills, which can be used to make Potion Of Regeneration.
Breeding: Axolotls are not breedable.
Tell me if there's anything else I need to add or any questions you have. Feedback is appreciated. Just keep it polite.
The idea is neat, and I want more wildlife in Minecraft, but this doesn't seem to have much of a use. Like Mastermined mentioned, Ghast Tears are already an ingredient for regeneration potions.
Some ideas to give it use are 1) Ward off a hostile mob, or 2) spit regeneration at you when you are low on health. That would actually be somewhat useful, especially early game. That would have to be balanced in some way, though. One way of balancing this would be to make them either cannibalistic (which they can be in real life) or scared of each other (because they are cannibalistic) so that you can only have one with you at a time.
Another idea to give it more use is to change the drop it has. You said they can regenerate limbs, so what about having the axolotl gills being brewed into a long lasting potion that will give you regeneration when low on health? Or maybe it isn't a potion. Maybe you consume the gills and that gives you the same effect. Or, maybe you craft the gills into some kind of totem that you hold in one hand that will give you regeneration when low on health. The totem, would of course, eventually break so it's not overpowered.
These are just my ideas though. Feel free to use them if you want to. I just think the axolotl should have more of a use.