They both work as normal pickaxe and axe, however the bonus effect does not work. I am not the only one who has purchased one just to find out after the fact that they do not work.
Sorry didn't have to to explain this issue in detail earlier as I was waiting on an important phone call.
So here is my EDIT:
The smouldering stone drop is useless because the thing it creates has no benefit. Other than a cosmetic change (which the ornament kit does a better job at doing), it has no value. Therefore the people buying it for the effect buy it just to end up with an untradable that does not work as intented, but is still releatively expensive.(I asked 20+ times in cc and yell over the course of 3 days and no1 answered if it worked or not, and I spent 6m on mine plus the pickaxe)
Fixing this issue would cause these items prices to go up, and inevitably make the dropping monsters more worth killing. It would be good for skillers and pvmers alike.
The price rise, would be totally worth it to most people so long as it did what it is meant to do.
On top of this- Another suggestion:
Make the smouldering stone usable on dragon harpoon to create a "insert clever name" harpoon that would give a chance of cooking the fish as opposed to firemaking the logs or smelting the ores.
This would cause dragon harpoon price increase and provide more usability even before the 20% speed increase is applied in a hopefully future update =)