Negative LA-Assignment : Resurrection, but no diamond here

[Beni-Kujaku]

I'm pretty sure the eternally-smoking hooves are magical actually. Handy magic, but definitely magic.

That's not the hooves, only the Nightmare's breath when it is out of breath. Similarly to a heavy smoker breathing their cigarette smoke on somebody. The fact that it has the insides on fire is maybe (Su), explaining the rating of the ability, but the action itself is just breathing on the opponent. That kinda reminds me of the Horse God in Toriko, who can compress air in his lungs, and fights by just blowing extremely high pressure air on the opponent.

Aquatic elf, lacedon (ghoul), merfolk, merrow (ogre), nixie, sahuagin, triton. Arguably all the low-level undead/constructs; maybe the kapoacinth (gargoyle), scrag (troll), and sea hag (hag). Definitely the dozen or so low-CR aquatic animals, if you can find a way to make them intelligent. Don't get me wrong, there's fewer in the water than on land, but not just a few.

I suppose I can get behind the idea that locaths would have radically different level adjustments in land-based and aquatic campaigns.

Just comparing it to the aquatic elf (LA+0) or the merfolk (very weak LA+1), I think I would go with 1 RHD, or 0 RHD, LA+1 in an aquatic campaign. The Locathah makes for a pretty good caster if it has a decent speed. And if you don't want to lose too many caster levels, it becomes the default choice (aquatic elf is just too underwhelming).