This is only a partial answer. I may add more information later, if I have time and can find out anything else.
Who are the "witnesses"?
I don't know, but probably not Frederick Douglass or Harriet Tubman.
Thoreau specifically refers to "her citizens", "her" being the Massachussetts Legislature. So these would be people living in Massachusetts at the time of John Brown's raid (late 1859).
Frederick Douglass was not a citizen of Massachusetts at that time; he had moved to Rochester, New York in 1847. Harriet Tubman, as far as I can tell, never lived in Massachusetts at all.
What was the "liquor-agency question"?
Massachusetts had passed a law in 1852 putting severe restrictions on the manufacture and sale of liquor. Only government agents could sell liquor, and only for "medicinal, chemical, or mechanical purposes". Later (I think), a State Liquor Agency was set up to centralize the purchasing of liquor and the testing of liquor for adulterants; the state agency then sold the liquor on to the city and town agents.
In 1859, there was a scandal in the state agency. The Liquor Commissioner had been keeping sloppy books, selling liquor outside the state, allowing (or possibly even conspiring with) manufacturers to increase profits by mixing the cheapest alcohol into the good stuff, etc. The Legislature was investigating that and changing the law in response.
What were the "poor jokes on the word 'extension'"?
I don't know.