The real advantage of making each blog post a separate page (in addition to the bookmark issue and the typography) is that each post can make use of whatever features I like. I mentioned changing the typography. Another feature might be to add a movie or a large image, which can be done more elegantly when it doesn't have to appear in a long list.
But the most attractive feature to me is to be able to make it good old-fashioned hypertext.
Of course, any Web page with links is hypertext per definition, as Mark pointed out in the case of his blog. But to me, it isn't really hypertext or hypertext writing unless the text is authored with nodes and links, so there are lots of forks and cycles.
To state it bluntly: each node should offer at least two equally natural places to continue reading.