Blog as a part of a WordPress site?

You say that blog will reside in http://example.org/blog. That’s incorrect. It will be as a part of your installation http://example.org. Create two pages: Intro and Blog. In Settings -> Reading -> Front page displays – select – A static page -> Front page – and choose Intro, then in Blog page – choose Blog. Set your parmalinks to Post name. That’s it. Add a post and go to http://example.org/blog/. You will have your post listed there.