In Drupal 4.7.0 beta 4, blogapi.module mostly works fine with Post2Blog unless 2 points. The first one occurs when trying to edit post. Categories will not return via XML-RPC. Below is my patch.

diff -u blogapi.module.orig blogapi.module
--- blogapi.module.orig   2006-01-12 17:02:45.000000000 +0700
+++ blogapi.module 2006-01-27 16:02:51.000000000 +0700
@@ -710,6 +710,17 @@
     $xmlrpcval["mt_convert_breaks"] = $node->format;
   }
 
+  $terms = module_invoke("taxonomy", "node_get_terms", $node->nid, "tid");
+  $categories = array();
+  foreach ($terms as $term) {
+    $term_name = $term->name;
+    foreach (module_invoke("taxonomy", "get_parents", $term->tid, "tid") as $parent) {
+      $term_name = $parent->name . "/" . $term_name;
+    }
+    $categories[] = $term_name;
+  }
+  $xmlrpcval["categories"] = $categories;
+
   return $xmlrpcval;
 }

The second problem is in taxonomy.module.

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