I'm fairly certain that 'blend' is used to mix processed and unprocessed sound just as it is on every other piece of equipment I know of that has a blend dial.
I can't recall who was talking about this earlier (may have been Kev, not sure) but someone mentioned using that in the FX loop or something like that - this would kill off the preamp fuzz and control the bass much more easily, so I'd certainly try that out if that's an option.
The thing about the TubeScreamer is that its clipping circuit has a very small capacitor wired into the same location as the diodes that do the clipping itself - so basically what happens is that, like tube circuits, the more you turn the drive up the more compression you get, but unlike most other circuits the Tube Screamer has that capacitor that rolls off a lot of the 'fuzz'. This, in addition to having another part of the circuit cutting some low end so there's less boomy distortion, means you have a more focused and less fizzy sound coming out of the box. That is why putting it in the effects loop would be recommended wherever possible - you're not losing gobs of bass because the power amp and speakers haven't worked their magic, and you're killing fizz because of that extreme-high-end mild rolloff.
My TS is modded a little farther from the 808 - I also cut a bit of volume and reworked some of the EQ so that it works equally well as a mild compression and a distortion enhancer, so I can't make any volume recommendations (as that setting's effects will also depend on your amp gain and EQ) but I actually have my drive relatively high - 3:00 or so (because the fizz rolloff increases as the drive goes up) and the tone knob right at a certain point on mine (which may be a mod thing, I'm not sure if it even exists on other pedals) where there's a little 'snap' between the typical warm drive and, on mine at least, a harsher and throatier sound. The sweet spot is basically found by turning off amp distortion and finding the earliest part of this transition - the balance between clarity and warmth is a personal thing (note that I like a harsh and dry sound where most people would want something entirely different) but once you've gotten used to finding that balance in the pedal, and working around it with your amp EQ or any pedal you may have to equalize it, you'll have what works best for you. My 'sweet spot' right there is just about 15 degrees from full-open, maybe someone else can see if there's that 'jump' between a warm drive and throaty grind.
Go ahead and try those settings but don't forget that the 808 has a different output section from the 9 so you may find the sound to be a bit more on the bright side in one of those, apart from the tone though the volume and drive should be fairly similar.
Last recommendation I can make is to put up clips - don't change anything but the TS Tone and Drive settings, try different combinations and go to town with it.
If you want clips of whatever I'm trying to babble about I'll provide them, PM or respond to this one and I'll clip up when I get my DAW working on the piece-of-shit Windows box.
Jeff