What was actually causing the problem for me was that my UI project had a lot of external assemblies referenced. Specifically, it was referencing some DevExpress Winforms stuff for reporting needs.
Once I refactored the UI project to not depend on those dependencies Blend started working great.
As a note, I attached a debugger to Blend while it was hanging and it seems that Blend keeps re-reflecting over those same assemblies. Also, the assemblies in question were not in the GAC.
The funny thing is VS2008 or VS2010 do not choke at all as far as intellisense on the same project.
Hope it helps.