I see that this is an old thread, so perhaps nobody is interested in another solution. Also, seeing as Sims4 exists these days, I don't know if anyone's still playing good ol' S3. At least I am.
I did however stumble into this thread when cursing my lost axe, and tried all the solutions mentioned above. It seems to me that the buydebug cheat does not work to retrieve the axe for a Sim who has already owned the axe. I haven't tried with another family member, but I'm guessing this goes for the entire household.
I didn't want to start right-clicking and 'deleting' the boulders by hand, it just felt wrong, so I really badly wanted to have the axe (or any axe really) returned to me instead, for the full boulder-smashing experience.
Oh, and I should say that the problem for me arose when I moved out the parents in the family to a new home. Neither of them had retrieved the axe (their daughter did) and neither had ever used or touched the Axe. It just seems to be some bug related to splitting up the household.
Anywho.. I went on searching the almighty net and found this item posted on the Sims 3 community:
http://www.thesims3.com/assetDetail.html?assetId=2269338#It is a storage lot, with a treasure chest inside holding a brand new Pangu's Axe. I tried it with my Sim who has previously owned an axe, and it worked just fine! Smashing too. I first tried installing the lot in my home town, and then went on to install one of these lots in China too. I probably will install one in Egypt and France too if it ever goes missing again (which it probably will, seeing as it's not the last time I will split up my household).
Also, I guess this solution goes under the 'no cheat' solution, at least I would reckon it to be cheat-free since you don't have to use neither testingcheatsenabled nor buydebug. It's smashing, come to think of it.