The rumor I'd always heard was that the Jewelbox was actually a blue movie theater back in the day when such things were carefully concealed. Hence the projection booth and extremely high clearance on the tables.
Don't know if that's true, but, like your bordello speculation, it makes the place seem simultaneously seedier and strangely more quaint.
Sorry guys, but your romantic, slightly purient speculations to the contrary, the Jewel Box's history is much more prosaic.
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