Typically when you do this, you're adding both the content to the primary domain, but also all the accumulated domain authority from the subdomain.  Generally we'll see nice effects like what you saw

That aligns with a test I did a few years ago--I had two nearly identical travel sites, one for Fiji, one for Tahiti, each ranking roughly the same for their respective set of keyword phrases.  For the Fiji site, I added about a dozen links to high-ranking related sites (with the keywords in the anchor text).  Within a couple of weeks, the Fiji site was ranking higher pretty much across the board.

The big question:  was it ranking better because it had outbound links with the anchor text? Or was Google favoring it because it linked to other sites Google trusted, therefore it looked like a more useful site for the end user?

If google wants good quiality results they would easly handle this.

Interestingly, there's a few examples out there of things you'd think would be easy to detect and reward/punish algorithmically...but that doesn't always happen.  Just a few months ago, I saw a site with over 200 micro-sites, all on the same IP C block, all with the same domain registration info--and all were ranking well for their keywords!  Surely it'd be simple to spot this as a link farm--but they were still doing fine.

And no, I won't tell you what the sites are

Hmmm...while I agree that Google ought to behave the way you describe, I'm still seeing Google treat subdomains as unloved orphans.  I have a client with very strong domain authority, ranks very well for all sorts of competitive terms on their main domain.  Their e-commerce stuff is on store..com vs. their main site at www..com, and there's a ton of links from the main site into the store (including deep links), but still we can't get any pages at store.*.com to rank.  In fact, most of the subdomain pages aren't even indexed.

Of course, one of the projects on the plate for this client is moving everything from store.*.com to the main domain...early this summer.

I'm assuming your setup is something like:

• blog.yourdomain.com  (blog)
• www.yourdomain.com (main site)

Nearly nothing, unfortunately.  You might get some anchor text benefit.  Best thing to do is to move your blog over to your main domain, and 301 all of the original URLs.