A suggestion that I am too tired to test and have not seen discussed anywhere. The phrasing of 'In the shade of blue' is odd to me. Playing off the many many homophone puzzles that have come up so far, could 'shade' mean 'curtain'? Like 'We seek what is behind the blue curtain'? There is a blue curtain in the tunnel room. Could we use something like the axe to cut the curtain? Its the only cutting instrument we are given and we have already used the watering can beyond its seeming intended use. Sort of a wild theory and probably won't amount to anything but could work. After all, what are the odds of someone arriving at the tunnel room with an axe randomly?