There is no reason why terra cotta would not work just fine, clay pots and tiles traditionally were used to house hives in the Mediterranean. The down side would be the possibility of breakage, and weight if you needed to move it. If you glazed the interior, I would avoid glazes that include any toxic materials like heavy metals. Bees propolize frames to the hive body, especially the "ears" that support the frames, you would have to be extra careful there so you wouldn't chip out the ledge and edge of your hive body. Maybe glue in a piece of angle iron so you are not prying directly on the clay hive body?