Prepare the octopus: If using frozen place it in a large bowl with water to thaw. Cut and separate the head from the body. remove the teeth that are located right in the center of the body. Open the head and remove everything that's inside. Rinse well.
Cook the octopus: Add octopus, bay leaves, allspice, and red wine to a medium-sized cooking pot (not a wide one). Pour in 2 cups of water and bring to a boil. Then drop the heat to medium-low and simmer covered for about 45 minutes or until the octopus is fork tender but not too soft and mushy.
Cool the octopus. Remove octopus from the pot and set aside to cool enough to handle. Don't discard the liquid from the pot you boiled the octopus in.
Cut the octopus into small bite-sized pieces.
Heat a splash of olive oil in a medium-sized cooking pot.
Saute onion and once softened add the garlic. Cook for 1-2 minutes more.
Stir in the tomato paste and cook for a minute to caramelize.
Add the octopus and cook for a minute or two. Then pour in 1½ cups of the liquid you cooked the octopus in.
Simmer for 5 minutes over moderate heat uncovered.
Add 2½ cups of hot water or vegetable stock (or use more of the octopus water if you don't mind a stronger octopus flavor).
Add the rice and ground pepper.
Simmer covered, stirring every now and then until rice is cooked (approx. 20 minutes). I like to leave it a bit saucy so I may add a splash of water toward the end.
Serve with a drizzle or extra virgin olive oil on top and freshly ground pepper.