WordPress’ built-in export/import functionality makes it a snap to merge two blogs into one. You simply export from the blog you’re going to retire, import into the blog you’re going to keep, and then forward the old domain to the new one.
Here’s my tip: do not select an existing blog user to “own” the imported content! Instead, create a new temporary user just for that content. Here is why: the imported posts may need some manual cleanup, like integration into the new blog’s category structure, or adding/removing tags. By importing into a new author, you’re creating a way to view only the posts imported in that batch. Simply go to the Users → Edit screen and then click the number of posts next to the temporary import author. Boom, you’re looking at only the imported posts. Then, as you clean up their categories and tags using 2.7’s bulk edit or quick edit features, you can simultaneously reassign the posts to their proper author. Once there are no more posts for that temporary import author, delete that author, and you’re done!