You can skip the first Part of your .htaccess, just use the standard WordPress configuration.
The main problem is, you need to create a new index.php in the root directory of your webspace, containing the following:
<?php
/**
* Front to the WordPress application. This file doesn't do anything, but loads
* wp-blog-header.php which does and tells WordPress to load the theme.
*
* @package WordPress
*/
/**
* Tells WordPress to load the WordPress theme and output it.
*
* @var bool
*/
define('WP_USE_THEMES', true);
/** Loads the WordPress Environment and Template */
require('./blog/wp-blog-header.php');
?>
You also need to create a .htaccess file in your root directory, containing the standard WordPress .htaccess, and then everything should work fine.