According to an old smithing manual that I have, the Flawless Aquamarine is used for smithing an Enchanted Seafarer's Harpoon. The recipe listed is: medium quality sheet of metal(not folded) + spear head mold +oak shaft+sea temper + flawless aquamarine. Here is a link to the finished product:
http://www.allakhazam.com/db/item.html?item=5698
Its a 6 26 weapon with +2 dex and +3svc. In the velious/Luclin era, pretty much useless.
Dropped for me while in group in Dredlands on North wall of Karnors. Don't recall what dropped it, as we were pulling drachnids, drolvargs and giants. Had several corpses at once, and I did not loot, but guy who did gave it to me, cause i'm the cleric. :)