The slug blog is reserved for the main/root site of a wp multisite setup. In short, I do not recommend trying to use it for something else – it only produces trouble.
The slug is hardcoded in some places, so you would have to do some hacky fixes to get around that. Which isn’t a guarantee you won’t have problems after all. Besides that it’s almost certain that those adjustments won’t survive the next update, so you have to do it all over again.
I could describe how to do it or link you to some how-to’s, tutorials out there, but I decided against it, because it’s just not advisable to do that. So if you really want to try it, you have to find the information yourself – here or on the net.
Note:
Above explanation refers to a sub-folder installation of wordpress multisite, if you are using a subdomain installation you should be able to use http://blog.example.ext without any problems. In the latter case you can safely remove blog from the banned names.