Jeanette discovered that using blogspot.com allows you to redirect your own domain name so the blogspot address becomes associated with your own domain name as a third level address; something like mdblog.dataprep.com. This overcomes the biggest obstacle to using 3rd party hosted blogging sites. Althought every solution has its challenges.
Using this approach would mean that blogs wouldn’t be published with iWeb and take advantage of its tight integration with mobile.me. Most notably, automatic page menuing would need to be turned off and the page menu links would need to be created manually.
I guess I’ll just have to see if the robust capabilities of blogspot are worth the tradeoff.