From: http://www.newanimal.org/tatzel.htm

The tatzelwurm is a dragon-like beast reported from the Alps of Switzerland, plus nearby Austria and France, where is is often known by different names. The tatzelwurm looks something like a lizard or snake. It has smooth hairless skin covered with delicate scales. The tatzelwurm can grow to at least six feet long, but some specimens, possibly juveniles, are considerably smaller. It has two small front legs, and its hind legs are either missing or vestigal. Its head is the most distinctive part of its body. The tatzelwurm's head has big eyes and looks remarkably like the head of a cat, except for it having scales instead of fur. This feline look is remarked on by almost all witnesses, and it firmly links it with the dragon tradition (http://www.newanimal.org/c-dragons.htm). Dragon's heads are most often compared to the heads of cats and horses as far as the overall shape goes.

However, this feline face is absent from nearly all drawings of the tatzelwurm, which usually show something that looks like a pinecone or cigar with four stubby legs of the same size, and tiny eyes. Drawings from the time period when tatzelwurm sightings were common are notoriously unreliable, with known animals often looking only slightly like they actually do, so these discrepencies might not mean anything. It is somewhat disturbing that most tatzelwurm drawings are relatively consistent, and most tatzelwurm witness descriptions are relatively consistent, but that the drawings and descriptions show creatures that are almost the opposite of each other. It seems as if the first artist did not consider witness descriptions of any importance, and then, as is often the case, all later artists took their cues from the earliest publicized drawing.

Reports of these creatures have become very rare, so cryptozoologists think that, if the tatzelwurm did exist in the first place, it may be extinct today. Speculations on what it might have been center on lizards, salamanders, snakes and otters. Some salamanders have vastly shriveled legs, so perhaps the tatzelwurm was a giant salamander (http://www.newanimal.org/salaman.htm) that was once native to the European Alps, an equivalent creature to known giant salamanders that are found in mountainous regions. With hind legs atrophied to almost nothing, it would have been aqapted to be far more comfortable in the water than most salamanders, but with still-existing front legs, it could get about on land if it really had to. Perhaps it was considered a mythical creature because it was usually hidden underwater and seldom came out to be encountered by people. This would fit in well with characteristics of the legends, as known species of salamander tend to be glimped rarely, and some known salamanders, such as the American mud puppy, have almost the status of legend.

If the tatzelwurm was a giant lizard (http://www.newanimal.org/buru.htm), this would fit better with its supposed habit of preying on land animals (salamanders, even giant ones, would be expected to eat mainly bugs and small fish), but then we would have to explain a lizard with well-developed front legs, but no (or very tiny) back legs. With snakes, we would need to explain why it had legs at all, perhaps suggesting that it was some kind of throwback or that it was actually an evolutionary link between lizards and snakes.

The tazelwurm could perhaps be classified as a lake monster (http://www.newanimal.org/lake-monsters.htm) or sea serpent (http://www.newanimal.org/sea-serpents.htm) briefly traveling over land, like the lindorm (http://www.newanimal.org/lindorm.htm) is supposed to be, but it would be rather small, and mountainous terrain far from the ocean doesn't seem like an easy place for such creatures to be, unless they are traveling from one mountain lake to another. Trying to classify it as an otter presents the most problems, because, unless the otter in question were suffering badly from mange, it would have fur and look very much like an otter. Even without fur, its back legs should be evident. If you want to disregard that many details from witness testimony, then it seems easier to throw out all tatzelwurm sightings as lies or hallucinations.