I currently publish to the latest WordPress on a PHP5 and mySQL5 server and I don't have any issues with the publishing but it might be some sort of specific PHP or mySQL configuration issue. And I've been able to publish the archives without any issues.
Well, I've tested it with the latest WordPress on PHP5 and mySQL5, both in my local test server (Uniform Server) and on my Dreamhost hosting, and I get the same fail. Mind that my weblog is in spanish, so I'm using accentuated characters and the letter ñ. Also, I'm using Blog since version 5 (if I remember correctly) and my current version is 8 Beta7, so there can be some kind of incompatibility after all the upgrades.
Basically, when you set up a remote blog on Blog by linking the remote blog to a blog existing in Blog and then hit publish, all entries from Blog for the selected blog (the local one) should get published to the remote blog since Blog has no record of those entries being published to the remote one before. That's how it's supposed to work. (But that sentence had the word blog way too many times and so might have been really confusing :p)
Yes, it's working that way. Then there's really no need to use the 'publish archives' feature when publishing to Wordpress.
Btw, there should be no confussion between Blog (the software) and blog (the site), but anyway that paragraph makes me recall that Monty Python sketch
I'm still testing, anyway...