Wordpress uses a database to store your posts and displays them dynamically not static, so there will be no sub folders.
Since you are not using a subdmain to access your blog these mod rewrite commands should be in your .htaccess file in the public_html folder and not the public_html/blog folder. So if you created a .htaccess file in your "blog" folder I would remove it and copy these lines into the .htaccess file of the /public_html folder.
Then again, I am new to the mod_rewrite commands and I could be wrong. Someone please correct me if I am wrong.