In addition to being uninformed about the basic facts here, I think you are overestimating the market for $7 - $50/yr blog hosting and underestimating the brand value of an exclusive Blogger TLD.

From Google's application for the .blog TLD (application #527):

> The purpose of the proposed gTLD, .blog, is to provide a dedicated Internet space where Google can continue to innovate on its Blogger offerings. The mission of the proposed gTLD is to provide a dedicated domain space in which users can publish blogs. All registered domains in the .blog gTLD will automatically be delegated to Google DNS servers, which will in turn provide authoritative DNS responses pointing to the Google Blogger service.

So, yes -- it's just for Blogger.