I've now experimented with Blogger Custom Domains and the newer features enough to confidently report that publishing via Custom Domains is a reasonably powerful platform. The inclusion of static pages (via the Blogger in Draft beta page) adds the much needed ability to include ancillary pages. See the index pages I added to Errbear.Com for an example of how to implement static pages. I also found it reasonably easy to modify the new template, as you will see. It's early, but so far I'm pretty impressed.
Overall, this was a pretty easy process. I don't know if I the additional Blogger features that weren't available with a custom template will outweigh the limitations of a canned template, but I can tell you that the process of moving to a Blogger Custom Domain was pretty easy.
As a recently converted FTP Blogger user, I know the experience I had on the FTP site was less robust and less dynamic than the Google experience I've long been used to. Switching, though a non-trivial process last fall, which also saw me migrate from www.louisgray.com to blog.louisgray.com, has been nothing but good news for me since, with greater access to all the new Blogger features, and near-instant publishing without outages that used to plague the FTP service.
Both Louis and Kent have offered to answer questions on their posts, and you're welcome to post a comment here as well. We will be sharing more details about the migration tool that's being built shortly, as several people have asked specifically what we will be doing when we release it in February. Stay tuned.