I've just downloaded Windows Live Writer and hooked it up to this blog. Just testing to see how well it works with Blogger.
So far it looks like it takes a copy of your template from Blogger and uses the CSS when you are writing, so you have an idea of what the final output is going to look like. Sweet. The functionality is also offline, so I don't have to be on Blogger's site when writing/saving/editing posts/drafts.
One thing that it does seem to be lacking is the ability to use Blogger's label function. Maybe it's time to use the labeling/tagging function of a third party site.
Update: Duh. It's a nomenclature issue, not to mention a near-sightedness issue. There is a categories field below the posting window (they are called "labels" in Blogger), along with a field for force-setting the publishing date. NICE. What's not so nice is the interface for selecting/entering the category.
Update II: You can add plugins, of which there are a bevy. For instance, there is one for Picasa and for Flickr, which I often use for hosting images for this blog. SCHWEET.