Transferring blog

Hello all,

I have a question about moving my wordpress blog.

I have had my blog hosted by wordpress.com for over a year now, and have always had it redirected to blog.mydomain.com

I want to run it off of my own server now, under mydomain.com/blog

I don’t want to loose all the traffic & pageranking, so I am unsure what to do.

I was thinking I would install wordpress to both blog.mydomain.com and mydomain.com/blog, leave the wordpress.com redirect in place, and modify the htaccess file in blog.mydomain.com to redirect to mydomain.com/blog. Would this work without loosing permalinks, traffic, google ranking, etc? What are the technical issues I need to be aware of. I read something about how wordpress uses 302 redirects which google doesn’t like, and that I need to somehow use 301 redirects. I am a complete rookie, so please help! Thanks so much!

Cheers