Explicación del término y su origen:

I'm not sure if folk of a younger generation can finish the sentence that begins 'Light blue touch-paper' but at one time it was written on every firework and was probably one of the first standard safety warnings for the general public...

he full sentence was 'Light blue touch-paper - stand well back' later replaced by 'Light blue touch-paper and retire.' The expression 'Light blue touch-paper!' therefore became a way of suggesting someone had done something dangerous or foolhardy and needed to beware of the consequences, especially, for example, when having said something that was likely to cause someone else to respond explosively.
http://cjewords.blogspot.com/2009/06/light-blue-touch-paper....