Environment: Terrestrial, Normal to Dry environments, Dirt.
AI: Non-Hostile, burrows in dirt and is attracted to vegetables flowers. Could spawn in any grass covered block and slowly eats crops.
Drop: Mole Hair, can be used in potion brewing to amplify already existing improvement to mining.
I imagine this guy being a non-hostile pest. I don't think that it should actually destroy dirt blocks as it "digs" around, but it could kill the grass on top of the path it follows so it leaves a conspicuous trail. I then makes a b-line for your garden and gobbles you azaleas! You gotta dig it's trail up to find the bugger, maybe a random chance of picking the right part of the trail, and then... whack a mole!
Let me know what you think.
I already have an idea for a variant. Working on the skin now.
Environment: Deep earth, in the magma layer.
AI: Non-Hostile, spawns in lava pools and can be attracted to the player if digging nearby. Slowly destroys rock blocks as it moves, pulling lava along with it.
Drop: Magmole claw, adds improved mining to a potion as well as amplifies fire resistance.
I imagine this sucker being a bit more of a dangerous pest. It won't actually attack you, but the tink tink sounds of you mining attract it, perhaps it sounds like the mating signal of it's species, which might bring an unexpected lava flow into your area. Mighty dangerous indeed!