Yes. When Blue becomes overlapped to leeward from clear astern,  rule 17.1 requires her not to sail above her proper course. Once Blue gybes, rule 17.1 no longer applies, because the boats are on opposite tacks. After Blue's second gybe, there is a new overlap, but not one that was established from clear astern. Therefore rule 17.1 does not apply, and Blue is allowed to luff as long as she complies with rule 16.