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My question is: is there any benefit to hosting the blog myself and directly integrating it into my site as opposed to just linking to it from within my current website
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You have more control of it if it is hosted on your own site. For that reason alone, I'd host it on my own site.
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If I hosted it myself I would set it up under a sub domain but currently the blog uses the standard blogger assigned URL.
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Blogger allows you to FTP to any site. So, you can just use Blogger as a publication tool, put publish the blog content elsewhere.