Hi there,

1) sure you can have all the blogs you want! I currently manage 7 blogs on the same domain name :) One of them will result as the main (the one visitors reach by typing the address like www.myblog.com), and the rest reachable with url's like www.myblog.com/index.php?blog=7 (or a link within the main blog). You have to see the thing like a multiblog platform; in your backoffice you can create as many accounts (and as many blogs) as you want, and assign to each one a level from 1 to 10 (what they can do).

2) As stated above, visitors reach main page and find a blog (the main one); if it's what they are looking for, they will read it, and browse it either by date (using a calendar on the sidebar) or by categories tree (as before, you can create as many of them as you want). If they want another blog hosted on the same domain, they will reach it by clicking on a link on the top of the main blog.
There's also another method to reach "sub-blogs", that is create a stub file (something like a static page); but I'm too lame to guide you in this. Hope someone else could help you.

Cheers,

Francesco