Yes, I also think the blue in the final verse is the blanket which was the principal means of her lover not being discovered.

Just one pedantic point though, Joe. The 17thc ballad is not a version of Keech i' the Creel. They are both versions of the same story but not the same ballad. They have no text in common. Whilst it is highly likely that the Child Ballad was based on the London ballad as in some other cases, it is not actually the same ballad by modern definitions.