I found that by removing the WordPress section from the .htaccess in the main website root, both main website custom 404 and WordPress custom 404 functionality appear to work correctly. Is there any reason why I shouldn’t do this?
Yes, this is what I was going to suggest.
If WordPress is installed in the subdirectory /blog and is accessed by the URL /blog/ then there is no need for the WordPress .htaccess file in the document root. You certainly shouldn’t have both.
However, the “WordPress” .htaccess file in the document root would seem to be rewriting to /index.php in the document root, which is incorrect anyway?!
Is the addition of a WordPress section to the root .htaccess by the Installatron WordPress installer incorrect behaviour for a subdirectory installation?
Well, you would need an .htaccess file in the root if you installed WordPress in the /blog subdirectory, but the /blog subdirectory was hidden from the URL-path. (It would, however, be written differently to the current .htaccess file in root. In fact, it would be the same as the .htaccess file currently in the /blog subdirectory.)