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Are you selling your own manufactured goods or reselling someone elses? If you're reselling someone elses, don't they have images of their products already to use?  I think it's rare for a reseller to take all their own product images, but if you do because you feel it gives you an edge, I would use your own logo prominently rather than as a watermark.  Maybe you have an artistic presentation of goods that needs proprietary protection - that is the only case I can see for potential watermarking.

And, if you're selling your own goods, do you also sell them to others for resale?  I frequently need product photos from manufacturers for promotion by authorized sellers of their brands.

Different companies have different ways they let marketing depts retrieve images, and from my side, the easier it is, the better.  I've never seen anyone put watermarks on their images, but some create their sites so you have to go through a lengthy registration process and wait to hear back - huge pain in the kisser for me as I have to go to the client, they have to find the account, get it back to me, I enter it, oops, website says not that string of numbers, go back... etc.  Time suck warp.

Some companies make their images non-downloadable (though there are some workarounds and screen shots).  The ones I like best - just let me have the images, no mess, no fuss.  I am after all trying to sell their products.

Then, I brand a corner with the resellers logo, but not as a watermark; rather it's a notice that yes, this company carries this merchandise.  And for SEO, if the reseller branded image of the original product comes up in image search (which they do sometimes as I always fully tag out my images), then all the better.  If you're selling your own goods with no authorized resellers, I think I would brand a corner also - no watermark, just a logo, but only if for some reason your logo is not already on the products.

I would move the blog onto the mainsite so you'll get the benefit of regular updates on your primary URL and avoid the possible penalties for having too many links from another site on the same cblock.  Use redirects to get your traffic headed from the old to the new, and in the future, add new content under your main site.

One tool I've begun to use more frequently is Search Queries in Webmaster Tools.  It doesn't tell me what keywords I'm not using already that others are, but it does give me insight into how people are already finding their way to our sites.  I look at the percent changes which show me trends in what people are searching for and use that information to add new content and more in depth information.

I use it wherever and whenever I can!  Sometimes I ghostwrite for clients, in which case they get the author credit, but currently I am listed as an author on probably 10 different blogs, all on Wordpress platform, though I'm not sure I've published under my own tag on all of them.  I do the research, the writing, and work with clients who get the author credit.

The more places you are listed as author, the better this is, in theory, for your Author Rank.  Google hasn't released the algorithm for Author Rank, but they do intend for you to use it consistently.  Unfortunately you can't even look up your Author Rank, at least not anywhere I've found.