A small company is probably not going to get anywhere near the traffic to justify using Google App Engine. A very popular blog could be run on standard hardware and if it ever got so incredibly busy that it exhausted all your resources, it isn't that hard to add extra web servers and do some load distribution.
App Engine would be a better solution if you wanted to create your own blogging platform from scratch and then serve thousands/millions of different blogs for different people from your app.
As far as I am aware, the support on App Engine is limited to Python and a preview of Java and when it comes to applications that can run on it, these tend to be limited to development frameworks rather than turnkey applications such as Joomla, Wordpress etc. The main reason for this is that you have to write your applications in a particular way to take advantage of the scalability of AE and to use the languages that they currently support. The other stumbling block is that most turnkey apps tend to require a relational database and App Engine's datastore is not relational and doesn't work like the usual databases that these apps are built for. For example, you can't do a count of the number of records in a 'query', something that apps built on mysql/postgres/mssql almost take for granted.