Hi Purtle,
On my 3.1.6 site I have a sidebar which works on Menu(2), It works from the blog also.
My set up is the following:
BlogTree
--BlogHolder
----BlogEntry
But I can have the following
BlogTree
--BlogHolder (as Category 1)
----BlogEntry (as 1st blog post)
----BlogEntry (as 2nd blog post)
----BlogEntry (as 3rd blog post)
--BlogHolder (as Category 2)
----BlogEntry (as 1st blog post)
----BlogEntry (as 2nd blog post)
--BlogHolder (as Category 3)
----BlogEntry (as 1st blog post)
----BlogEntry (as 2nd blog post)
----BlogEntry (as 3rd blog post)
--BlogHolder (as Category 4)
----BlogEntry (as 1st blog post)
Then when you go to the blogtree page, the nav will show up at the top and Menu(2) will point to the blog holders. You will then simply need to add a link for "ALL" which points to BlogTree.
-helenclarko