The way the weblog space (blogspace) is developing reminds me of the web back in 1994. In the very beginning the web was composed of weakly connected islands of pages. The way you found new pages was through external links, like posts on usenet, or addresses published in print mags like WIRED. Likewise when people first started keeping weblogs, you found them through web pages that were not weblogs themselves. There was not any weblog space to speak of yet.
The web quickly formed its own internal entry points, this was the "Cool Site of the Day" model. Weblogs paralleled this, but in a more distributed manner when they started linking to each other. The way you found new weblogs was when the ones that you already read linked to others that they found interesting. This creating a "browsing" user experience.
The next step the web took was with directory sites like Yahoo. Although directory sites originally intended to provide direct links to information you wanted, they ended up augmenting the browsing proccess by making it faster and more efficient, instead of replacing browsing completely. The weblog space parallels this with backlinks, blogrolling, and other technology enabled by RSS. This is the present state of weblogs.