> is a prehensile tail even a plausible way to use tools and advance?

This might be the limiting factor for your sentient, tool-using species. I can think of two problems with this design:

# 1) The tail is at the back but the head is at the front #
If your creature relies on it's eyesight (which I assume it does) it will have difficulties knowing if what it tries to do actually works or not.<br>
Try solving a rubiks cube. Pretty hard, right?<br>
Now try solving a Rubiks cube behind your back...

**Solution: long neck or scorpion tail**<br>
I think your creature would either evolve a long neck so it can turn around and look at it's tail or evolve a long scorpion-like tail so the end of it can dangle in front of it's head. <br>
If you go for the scorpion tail, instead of going above the creature, it could also go **below**. Think of it like a dog tucking it's tail between it's legs. I think this would be more fitting for a cold environment since it would minimize heat-loss.
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# 2) Having only one tail is like having only one arm #
If you carve a spear you hold the stick in one hand and use the other to carve. Having only one arm makes this a lot harder. You have to use the environment to fixate the wood so you can use your arm to carve. It might not be impossible, but your species will have a very hard time building anything if they **only** use their tail.<br>
An easy solution would be to not only use the tail, but also the "hands" and/or mouth. Gorillas for example walk on four "legs" but still use the front two for grabbing stuff. <br><br>

You seem to have thought about this problem as well and came up with the split tail as a solution. I think this could work quite well, the proportions are a bit off however (as you said). The "tentacles" should be a lot longer to serve the function of a "left arm" and a "right arm". By that I mean that both the left tentacle as well as the right one should be able to **independently** grab an item.<br> Do they need "fingers" for that? You could split the tentacles again, which probably makes grabbing things easier, but it's not necessary. One tentacle can also just wrap around an item to grab it.
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# So how would a species like that evolve? #
Figure out a plausible reason for an animal to evolve a tail that can grab stuff and the rest is easy. Evolution itself will try to move your tail in your field of sight and will also favor a split tail as this means you can grab two items which makes tool building just that much easier.