After defeating the Blotworx Dragon go up to the roof of the Emporium. Talk to the Blue Gremlin. Give him some scrap metal and he will repair the compactor. You can now go to another area in the underground.
Wait until You can use Oswald's Boomarmarang to hit multiple targets at once. Go over to the rocks you use to get to the Emporiums roof for the paint path. Thin them out and thin out the door behind them. Then thin out the toon on the backside and have Oswald shoot his Boomarmarang at them the tower will come crashing down creating an easier way to the scrap metal underneath