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My initial thought is that a blogger on their server with links back to my site will be seen as external links to my site (good) whereas a blogger on my site will be seen as additional content (good with google, perhaps even better with Yahoo). Are there any other considerations as to where to host the blogger (e.g. I assume that if it is on their server, one gets automatic software updates)?
Also, which blogger is the best to go for? I've played with blogger.com and bloglines.com. I note that I can cut and paste HTML (e.g. anchor text with a link to a site) in bloglines, whereas in blogger it takes out the anchor text. However, this may just be because I'm missing a technical consideration. From the point of SEO and other factors, which blogger should I go for and why?