How would you normally fry ants on the sidewalk? (Author's Note: The author neither condones ant frying nor takes responsibility for any ants fried after the reading of this hint.)
With a magnifying glass.
Now, you don't have a magnifying glass.
But you have the next best thing...
A spyglass (i.e. telescope).
Herman Toothrot has a spyglass.
He keeps it in his house.
Where does Herman Toothrot live?
The spyglass is inside.
Just pick it up. (If Herman Toothrot is inside, you may have to exit the fort and then re-enter.)
Now you can't use the whole telescope to make a spark.
You have to use a certain part of it.
Somehow you have to remove the lens from the telescope.
You can do this with one of your basic interface commands.
Open the telescope to retrieve its lens.
So how do you create an explosion to blow up the dam?
Use the lens with the gunpowder placed on the dam to create an explosion.