Touch the blue paper

It sounds to me like he has misquoted 'Light the blue touch-paper', as you suspected. There is no such idiom as 'touch the blue paper'. Nobody's perfect!

It's an alteration of light the blue touch paper. Blue touch paper is a type of fuse used in explosives. The phrase light the blue touch paper thus gives the imagery of doing something which causes a figurative explosion of emotion.

Blue paper has no special significance, nor does touching blue paper. The closest you could get is touching a blueprint (a construction plan for a building), and there's no special significance to touching those as well.