Learn English – the meaning of “the green and blue of the crops”

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!

"coiner" - one who counterfeits coins. Not something we hear of much today, but in earlier times was a reasonably familiar sort of criminal.

"box-room" - a room in a house (usually a small room) which is just used for storing things, usually things that are not wanted very often. The collocation "box-room attic" is unusual, because these two words mean nearly the same thing. (Not quite, because a box-room could be anywhere in a house, not just under the roof).

"cistern": yes, it is still quite common for British houses to have a water-tank in the roof space - sometimes two (hot and cold). This was partly to provide a head of pressure for taps and showers, and partly to guard against interruptions in supply (and in the case of hot tanks, to provide a reservoir of heated water for when you needed it quickly, as in a bath).

There is not a literal tunnel, it is saying that between the tank and the sloping roof there is a long and narrow dark place (dark because it is behind the cistern).

"of course" is a parenthetical remark meaning "as you already know", or "as is obvious". It is much more common in speech than in writing, but of course this writing is meant to suggest somebody is speaking, and telling a story.

"For" says that the sentence is a reason or explanation of what precedes. So the meaning of "For of course he was thinking .. " is something like "(He was excited) because, as you probably realise, he was thinking ... "