I've been using PluggedOut Blog for several months now, since a search for "integrated blogs" led me to TCH-Tim's posting in this thread. As a result, I signed up with TCH and installed PluggedOut.
I first integrated PluggedOut into my existing site and recently used it to develop a portfolio site.
I've found that it's easy to use only the elements of the blog that I need, and to place each element exactly where I want it. So, for example, I stripped the comments out of my portfolio site, since it's for display only.
I've adapted categories to function as menu items. And the blog format behaves like a content management system (CMS), which is easier to manage. But I'm also able to use regular html pages where needed. The blog manages archives through a calendar display, which has the benefit of a smaller footprint.
The developer just recently moved PluggedOut to SourceForge, in order to attract new coders and expand the user base. The blog in fact could benefit from expanded features and still has a few bugs relating to the way comments are displayed. But due to the blog's efficient design, these issues should be easy to resolve.
Get it at www.pluggedout.com