Reading Joe's character profile I was intrigued by the fact that he has mismatched eyes in the dream, one brown and one blue, while in the meeting with Diane his eyes match and are a slightly different shade. I was wondering if Diane's mind was associating his right eye as being brown because of the coffee mug on that side of the table by him being brown and his left eye as being blue because it is closest to the blue key when he holds it up. It's some mundane item that her sleep state could have incorporated and processed strangely.
hmmmm .... ha!!! just now the realization... Dr. Jacoby has different colored eyes and so does the guy who played Jacob in LOST. <-- Joke.
anyway, yeah, looking through the red curtains of the black lodge with one eye. Looking through the blue curtains of Blue Velvet with the other eye. The magician longs to see.
I'm thinking his eyes are different colors in the scene with Ed, because at that point in the dream, he was representing two people at once: himself (as the literal killer) and Diane (who hired him and ordered the hit).