This is working pretty well for me, but I did find one hiccup. The posts from the excluded blog are still copied over to the tags blog, so they are being counted in the total number of posts. My latest sitewide posts page is supposed to display 15 posts per page, but because the excluded blog has 5 posts on it, my front page is currently only displaying 10.
I tried adding an if statement to the SWT code, but nothing I did seemed to have an effect. The only way around this that I can see around this is to delete posts from the excluded blog from the SWT blog as needed.
Anyone care to have a look at the SWT plugin (it's really only one file) and see if they can figure out how to add an exclude statement to keep posts from a certain blog from even being copied over to the tags blog in the first place? My guess was that something could be added somewhere in lines 179-200ish (but I could be way off).