How many arms does one octopus need???

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This octopus has 96 arms. That's just not right!

See PinkTentacle for more on this bizarre critter, and another 85-armed specimen. Euw! via Ectoplasmosis and lots of places.

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If the extra arms grow only after injury to the animal, are they not, essentially, akin to cancer, some sort of oncogene-like flipped switch? Does anyone know more about this?

Indeed, the regenerative properties of echinoderms and amphibians do involved "flipped" developmental switches. They've been studied for some time for clues into how we could return injured tissue to an undifferentiated state and initiate regrowth in a controlled way. Unfortunately, I don't have any of my dev bio reference books here with me, but you might look at this review article by Alvarado and Tsonis for more detail.