I'd set up BlogEngine as it's own web application in IIS as a subdomain of the original site.
ie: your DC site: www.Example.com would have the Blog hosted at blog.Example.com
This would allow you to deploy the blog with all the native settings, and even retain the web.config for it. Then just skin the blog exactly as the main website, and the user is never the wiser.
The only downside is cross site communication. You may loose the session variables stored for the main site when the user visits your blog, and (I'm not sure about this) you may also lose access to all the site cookies from www.Example.com.
There are workarounds you could do server side though. Like store the IP and user information in the common database and check referers, date & times, and IP when somoe visits the blog.
I'm planning on doing this for the current DC store I'm working on. I'll let you know how it all goes andf what type of snags I run into.
- Jason MH Alvarado