UPDATE: Sounds like MyBlogLog’s acquisition announcement was a bit premature; TechCrunch announced a bit of a retraction / update; thanks to Mat Ingram for letting me know. Tsk-tsk to me for updating this post 24h later (which, according to Rob Scoble has allowed to transmutate it into fact; my apologies to anyone who has mistakenly witnessed this miracle of truth).

** With Yahoo360! being widely panned as the KFC of blogging tools (oily, gives you heartburn, make you feel gross), one wonders whether or not the acquisition of MyBlogLogs by Yahoo (for 10M clams — nice!) is a more concerted effort to spread its tentacles into the blogosphere proper.

I’ve been meaning to blog about MyBlogLog — I love it. Think its great. While it also doubles as a metrics tool, where you can figure out some basic stats like where people are coming from and going to (i still don’t know how it does this just with cookies), the real fun thing is how it organizes blogs, and the people who author them, into communities.

Auto-magically.

So, once you’ve installed a tag on your blog, it keeps track of where you’re going, and which blogs you frequent and after a while, starts compiling “communities” for you to join in on. When you log in, you can actually see who has “joined” your community, which “contacts” you have (communities for authors?), and your own little message board (a la facebook’s “wall”).

As I said, though, the coolest thing is being able to see who has dropped by. From time to time, for example, Mr. Kirkpatrick of TechCrunch pops by on this blog, as has Emily Chang of eHub, Scott Karp of Publishing 2.0, and a few others — which is pretty damn cool. And for the ego-impaired, offers some level of validation for your blogging efforts (someone’s reading it!)

But with MyBlogLog’s acquisition by Yahoo!, one wonders how this all figures into Yahoo!’s Web2.0 Strategy. And they have one — as presented at the Web2.0 Summit. It involves four arms:

1. User generated content. Flickr is an example of this as users generate all the content.

2. User organized content. This is where del.icio.us comes in, as it’s really about organizing URLs through tagging.

3. User and publisher distributed content.

4. User developed functionality. Mashups like combining Yahoo Maps with Flickr to create geotagging.

More than just being able to control where people blog (Yahoo!360), mybloglog could represent the third arm here, joining both Flickr and De.icio.us as number one and two; MyBlogLog happens to reside on so many blogs now, it might yet be reaching a critical mass amongst connectors and influentials, it could fill that role of “user and publisher” distributed content.

Hang in with me here — let’s think about it:

After all, blogs involve both users (reading, participating in blogs) and publishers (their own content), and many blogs now have the mybloglog widget on their sidepanel already. And with this purchase, its just purchased a literal hand (foot?) hold into many blogs outside of the typical Yahoo! demographic — but what falls in perfectly with the same demographic that uses Flickr and Del.icio.us. Literal in the sense that even on this blog, Yahoo now occupies some real estate — that I’ve given away for free.

MyBlogLog can deliver ads in the “background”, when bloggers are logged in and viewing other communities. That’s boring. What’s particularly more insidious is how Yahoo! could try and use that real estate in the future; could it be a stepping stone to offering tasty and attractive monetization programs (can you say “Panama?” )to compete with adsense? how about a way to push its own rich content to content starved sites? Or links to its own network of sites? (Goodblogs, look out!).

In other words, Yahoo! could view MyBlogLog as its widget to blogging legitimacy — and an entrance to some of the most interesting blogs (this one, perhaps excluded) — or at least early-adopting blogs in the blogosphere.

Time will tell — any heavy handed overtures, at the same time, will probably be met with stiff resistance (and deletion on your blog).

In fact, since MyBlogLog has been acquired by Yahoo! — will any of us delete our mybloglog widget on principle alone? (… but who is really that hipsterish, right? )