Soak the agar-agar in cold water for one hour. Squeeze out excess water and tear into small pieces. Place the agar-agar in a saucepan along with two cups of water and bring to a slow boil. Stir with a wooden spoon until the agar-agar completely dissolves. Skim off any scum that rises to the surface. Place the red bean paste in a bowl and slowly add the strained agar-agar liquid. Mix until fully combined. Return the mixture to a clean saucepan and cook over low heat for five minutes. Add sugar to taste and the salt. Remove from heat and add remaining ¾ cup of water. Stir well. Cool down to lukewarm by placing the saucepan in a larger bowl of ice water. Continue stirring to lessen lumps.
When the mixture is lukewarm, slowly pour it into a square baking pan (9-inch or 23 cm). If there are any bubbles on the surface, price them with a toothpick. Cover with plastic wrap. Place in the refrigerator until fully set and chilled.
To serve, run a wet knife around the edges of the pan and cut into squares. Mizu-yokan is best eaten with dessert spoons.
Notes
*Agar-agar is gelatin made from seaweed. Used in many Japanese sweets, it is available at Asian markets and health food stores.