Hi Dave -- I looked at the Recent Posts widget (widgets\RecentPosts) and the Recent Posts control (App_Code\Controls\RecentPosts.cs). They both appear to take the current blog instance into consideration -- from what I can tell.
The Recent Posts control under App_Code maintains a "blogPosts" dictionary where the recent posts for each blog instance are maintained. The Recent Posts widget is using the Blog.CurrentInstance.Cache mechanism to cache and retrieve the recent posts
for the "current" blog instance. In both cases, it will serve the recent post list based on the "current" blog instance.
On my local machine, I have BE 22.214.171.124 running (a slightly newer version than the official 126.96.36.199). I just created a new blog instance and created a couple of test posts under it. Both the primary instance and this new blog instance are using
the Recent Posts widget. On each blog instance, a separate list of Recent Posts are displaying. So from what I can tell, the Recent Posts widget does appear to be "multiple blog aware".
I did try pulling up http://sueetie.com/blogs/ but am getting a YSOD error -- i.e. the typical "Runtime Error", please turn off customErrors to see the details ... so couldn't see the 404 errors.