I believe this is the intended interaction even though it is not intuitive. The Azerite Murloc’s battlecry is pretty specific “Transform ALL your other minions into ones that cost (3) more (keeping their original Costs).” Because the minions in hand and deck keep their original costs, they won’t evolve after the second battlecry because the battlecry specifies “ones that cost (3 more)”
On board, the battlecry works as expected, because a minion will always have its base cost on the board. So a 2 mana minion becomes a 5 mana minion, then an 8 mana minion, then an 11 mana minion
In your hand or deck, a 2 mana minion becomes a 5 mana minion, but the minion still costs 2 mana, so when the battlecry goes off again, it evolves into another minion that costs 3 more than 2