[thesnare]

Yes, you can only use it in the fortress, as Coaxmetal in the Siege Tower in the Lower Ward of Sigil says it only works in a place that is cut off from the planes.

Spoilers below


But, you can cut your throat with the blade in the fortress anytime, of course this is really useless and doesn't solve anything, other than the TTO dying too, which you'll see anyway if you defeat him in combat