For a Panic card, can you draw a blue card that is already in play? If you can, is it possible to use that same blue card for yourself?
From the rules describing the "Draw a card" symbol:
If “any player” is specified (see that symbol), then you can draw a random card from his hand, or you can choose one in play in front of him. If no player is specified, draw the top card of the deck. In any case, cards drawn are added to your hand.
The rules don't explicitly clarify what happens when you're drawing from a player in range 1 rather than "any player", but it's reasonable to assume that the same rule applies to those two very similar cases. So yes you can take a blue card that's already in play and put it in your hand. And once it's in your hand, it's yours just like any other card so yes you can use that same card yourself.
The rules say "“Draw a card” from “a player at distance 1”".
This is in the second edition FAQ (unfortunately no link, but it is referenced in a discussion at boardgamegeek):
Q28. Can I use Panic! or Cat Balou on cards in play?
A. Of course yes. You can play the Cat Balou on a card in an opponent’s hand (randomly choosing which card to pick) or on any one card in play, at your choice. The same for Panic!, with the following differences: you can target only cards of a player at distance 1, and the card you choose goes in your hand even if it was already in play. When that card is in your hand, you can play it as any other card.