@Ipstenu: please don't take this personal, you know I have thanked you for your advice a couple of times but this was not a question about it working or not rather about the newest version incorporating MrBrian's changes as outlined above:
Unfortunately, it has to go in the plugins folder and be activated network wide. It's not really optimized for multiuser because it creates an SQL table for every blog and stores it's options per blog - you would have go into each individual blog's dashboard to see whats been blocked or change the options making it impossible to use the blacklist api feature.
That's why I created a modified version for WPMU - it's working great for my blog network. You can put this one in mu-plugins and manage options/logs network wide instead of per blog. Thought I might as well share it.