Thanks for the help. I realised I was overcomplicating things.
Turned out to be pretty easy once I realised I was confusing myself with the whole multi-site thing. As I wanted a blog as a sub section of a wordpress-driven website, i finally realised I didn’t need multiple sites at all – just needed one site with the home page set as a Page, and the posts index in the /blog/ subdirectory.
Finally a 301 redirect seems to work for pointing all the old pages at the new ones. (though it does change the URL in the browser, but i don’t think i can get around that on free hosting.)
Cheers for the help though.
Refs for anyone with a similar issue:
http://codex.wordpress.org/Moving_WordPress
http://yoast.com/move-wordpress-blog-domain-10-steps/
http://www.webmasterworld.com/forum92/4068.htm
