So I set up a MSN Spaces weblog to test it out. It seems "OK" -- not much control of layout or visuals (and the existing templates seem so 90's). It does attempt to solve one of the ugly problems of weblog editing (uploading pictures) but does so in a way that is incompatible(it uses an Activex component) with anything but IE (it does provide an out though for non IE browsers).
Viewing the weblog has a nice slide show display of pictures (but it doesn't seem to work as nicely for Firefox as for IE -- deliberate?).
Otherwise it seems to have most of the things that define it as a weblog -- RSS syndication, TTW editing, displaying posts in reverse chronological order, a "link" list, comments, traceback,access to referrer statistics, permalinks all with no apparent deliberate appropriation of function under a different name in an attempt to own the definition(something Microsoft seems to have done often in other spaces) or changing of the traditional definition.
It has a few oddballs -- wtf is the "Music list" ?-- seems less than useful in its current incarnation.
It is still a beta though. As someone indicated perhaps this is like IBM getting into the PC game -- legitimizes the category.