This is the reply I received!
Dear Dr. Uffindell,
We have kept Axolotls [Ambystoma mexicanum] for over forty years here at the Aquarium at Chester Zoo. We have kept them on pea gravel, and as you saw on your visit, a mix of sand and small gravel, neither substrate has been a problem for us. Axolotls do ingest small pebbles from time to time, but we have never had a death attributed to the retention of gravel.
Axolotl gills generally are larger when they live in polluted water, with less oxygen. In our tank, we have a small flow-through of fresh, cold water, and good filtration. This is the probable reason for the smaller gills as the water is well oxygenated, they do not need larger ones.
The tank in question is 6 foot x 2 foot x 2 foot deep, and holds 150 gallons of water. There are 16 Axolotls in the tank, and most of the time you are hard pushed to see more than four. If the animals had just been fed, and were all out feeding, this could be why you felt the tank was over crowded.
Chester Zoo is actively supporting Axolotl conservation in their native Mexico.
I hope this answers your queries.
Yours faithfully