Step 1: Supplies
Chocolate frosting - store bought or homemade
Homade Fondant - I used the marshmallow/powdered sugar recipe found HERE to make it (one batch does about 24 cupcakes)
Food coloring gel, paste or powdered: purple, brown, black, green, yellow or else customize the colors
Bamboo skewers - about 2.5-3 inches long (or cut longer ones down)
Vodka - just a bit to thin out the food coloring
A fresh exacto (craft) knife
Round cookie cutter - 2.5-3" in diameter
Step 2: The Eyes Have It
Tint The Fondant
On a clean surface or in a large bowl, place about a tablespoon of fondant for each cupcake you are going to decorate. You are going to tint this very slightly with yellow and brown, just to prevent the whites of the eyes from being pristinely white. You want them to be hazy and murky. Dab a little yellow and a little brown food coloring gel or paste onto this quantity of white fondant and knead it in. Add more color or more white fondant to adjust the color to your liking. You can also dust the surface with cocoa powder and work it in for for a more mottled appearance.
To create eyeballs for the eyestalks, form about 1/4 teaspoon of tinged fondant into a ball. Place this ball on the flat end of a skewer. Work the fondant down over the skewer end pushing it snugly against the skewer and pinch it around the stick. Make sure it is securely attached and then coax the very tip into a round shape. Set these eye stalks aside to dry for an hour or more until the outside is firm, dry, and set-up. (If you jump straight into covering the eye stalks with the beholder "skin" it will quickly become a mess.)
TIP: To keep the eyestalks upright and prevent soft or flat edges, fill a bowl with sugar and put the sticks into the sugar.
For each large eye, take about half a tablespoon of fondant and roll it into a ball and begin to flatten it, making sure you are created a raised center, not a flat disk. Lay this onto a powdered sugar sprinkled surface and finish forming the eye shape, creating a flat back. Set these large eyeballs aside. These don't need to harden so you can tent plastic wrap over them to cover them if you'd like.
Step 3: Teeth
Roll out the fondant into a rope about 1/4" thick. Press the rope flat. Using scissors or a pizza slicer, cut this flatten rope into narrowly pointed triangles. Lay the triangles onto parchment paper or waxed paper, sharpening the points as you go and making sure the flat end of the triangles are pressed down.
Step 4: Beholder Skin
Step 5: Covering the Eyestalks
Brush the outside of the portion of the fondant eyestalk that will be covered with plain water. The water encourages sticking between the surfaces. Don't let the portion that will be the visible eyeball get wet. Poke the end of the skewer through the cavity you created and out the other side, sliding the skewer down through until the eyeball fit into this cavity. Compress and mold the skin-colored fondant around the eyestalk, making sure it has good contact with the skewer and that there are no air voids. When you are done, use a butter knife to score the fondant about and inch and a half from the pointed end and remove the fondant below this. Set the eyestalks aside.
Step 6: Cupcake Assembly
Roll out the skin-colored fondant to about 3/8 -1/4" thick on a board dusted with a combination of powdered sugar and corn starch. For each cupcake, use the cookie cutter to cut out a disk of fondant. On each disk, cut openings for the mouth and eye as shown in the picture.
Remove the disk from its cutting surface and, making sure the excess residue of the powder on the back is brushed off, lay it over the cupcake. Immediately, arrange the slits around the eyeball and teeth. Press the fondant firmly against the frosting to make sure it sticks well. Trim any excess fondant from around the cupcake.
Resist the urge to place the eyestalks now. They still need detail paint and this is much easier done prior to placing them in the cupcakes.
Step 7: Eyeballs: the Windows to the Dark and Murky Soul
Now you are going to paint the irises and pupils of the eyes. The eyes can be whatever color you would like. I decided on a green-brown. To paint on the color, you will be mixing vodka with food coloring. This will thin it out, making it easier to paint, and allow it to dry quickly. If you don't have vodka, another option is to use clear vanilla extract (or brown if you don't mind the slight tint). The higher the alcohol content, the quicker the drying.
Place some gel, paste, or powdered food coloring in the color(s) of your choosing into a small bowl. Add a small amount of vodka and stir it in with a paintbrush. Test the color out on some paper to make sure you've got a consistency you can work with. Adjust as needed. Before you paint the eyes, you might want to practice on some paper or a small bit of scrap fondant, if you have any left.
Paint the irises onto the large eyballs. One tip is to paint on the circle and then drag the paintbrush from the edges toward the center to create a striated effect. Next, paint the irises onto the eyestalks. Hold the eyestalks as you paint. It is much easier and gives you more control. Set these aside as you work.
Once the irises are dry, which should not take long, add the pupils. For these, you can use straight food coloring. I used black decorating gel which also works. The pupils can be dots or they can be slits. For the slits, paint a dot in the center and drag a thin paintbrush away from the center to create the tapering slit.
When you have painted all of your eyes, press the eyestalks into your cupcakes and they are done.
Optional: For an extra flourish, you can tip the points of the teeth with red gel food coloring to make the beholder look as though it has eaten recently. Also, the fondant can be textured a variety of ways to give the skin a less smooth look. Make cracks or lines with a toothpick, make indentations with the end of a paintbrush, etc.