Not sure if this is a bug or by design, but the human_only flag on equipment/weapons prohibits Azure-touched from using them.

Per the helpfile, azure-touched are humans physically. The only physical difference is that they glow. It stands to reason that equipment physically designed for a human would still work on them (similar to how Elf_only works for any of the three elf races), since they're more just a special type of human rather than a physically different race.

It's interesting that we've mixed categories here, but the race_only flags are indicative of physical characteristic restrictions for races with atypical body parts (claws, wings, tails, etc.). For those without those characteristics, they have been used to indicate a purely racial (rather than physical) restriction.