Frame blending could be useful if you were doing a cinematic trailer with lots of closeups or if you were doing a brief slow motion scene. But otherwise I think it's a cheap shortcut. I feel like, no matter how you use it, good animation skills will always be better. And that type of skill can never be substituted.
I think it has it's place, and I've seen it in executed well in films such as Zombie: Genesis, but I'm a purist.

To quote what Nathan posted over in "Smoother Animation:"

I find myself really liking the slow motion effect done in Paganomation's Go Miniman Go! brickfilm. It looks just like a 24fps film when "slowed down" (not like high-quality slo mo's done at higher frame rates, though) and, doing such a shot without the frame blending wouldn't look as good (unless you decreased the movements and took more frames, but, honestly, would it still look like slow-motion at that point, or would it just appear that the minifig's moving slowly...)

And, I'm sure we all know the story of Jurassic Park, right?

Spielberg was originally going to feature stop-motion dinosaurs in the picture, but decided against it later... Why? Because he thought that the stop-motion had too recognizable of a look. He knew that the audience wouldn't be fooled... everyone would know it was animation. So, in the end, they went with CGI - and Jurassic Park went on to revolutionize the film industry. (or, at least, is often tied to the increase in CGI's popularity for filmmakers in the following decades)

In lieu of firing the team of animators that the studio had already hired, they used them for storyboards and, apparently, even some of the CG work in the final film.

Apparently, the already made puppets were hooked up to a wireframe in the computer, and then, the animator's movements were captured there. I know it said something about this process on the DVD behind-the-scenes, but, I couldn't find a clip on youtube, unfortunately...

If this process was indeed done, that means that the computer went on to "fill in" frames between what the animators actually recorded... essentially frame-blending. (more like artificial in-between's, but, you get the point) Here's a clip, sadly heavily interlaced, of what the original stop-motion T-rex would have moved like...

And, I agree with Spielberg. Those movements aren't "real" enough. Now, does that mean animators should always use frame-blending (or even use it at all), no, of course not! However, I believe that frame-blending can add a bit more fluidity to the end result of good animation... somewhat masking the stop-motion itself. Some say that's detrimental and should never be used... but I think frame-blending has merits in certain situations.

I can't speak for all who use the process, but, my goal in using frame blending isn't necessarily to achieve "better animation," but rather, to have a different and unique look...

Let's remember Lech's post on the "Smoother Animation" thread:

I consider the use of frame blending to be somewhat of a stylistic choice... so, I can never be outright against its use in animation. Movies themselves are really just a big special effect, as it is. Director's, animators, and editors shouldn't discard any process on the notion that it "looks bad to some..." if that could sacrifice creative potential... especially in such a limiting field as stop motion. (let alone brickfilms)

If the process could benefit your film in any way (even if just to set it apart from other films in an insignificant way... I'm looking at you, Peter Jackson) I wouldn't count it out.

That's why it strikes me as odd when some brickfilmers are wholly against its use, and think that its not beneficial under any circumstances... period.

I agree, Sloth. Generally, shortcuts will never trump working hard to achieve the same effect. (Whether that be smooth animation, or a perfection in any other art form)

Onion-skinning (essentially in-production frame-blending) won't help improve animation, and frame-blending (post-production) won't smooth out animation after the fact... rather, it's an effect. (And, debatably, a useful tool or a complete waste of time)

I would have disagreed with that statement before this discussion started, however, now I see that many are against the use of frame-blending outright.

I'm really glad that this discussion was started. I've always found animation (and post-production effects of any kind) to be a fascinating subject - especially when applied to my favorite hobby. I'm sure these topics will be great for others to read though and form their own opinions on.

To each their own. I actually like the dream-scape look that frame blending seems to give that project.