I want to start modifying the built-in blog portlet. The files are located in portal-web/docroot/html/portlet/blogs

Where do I put my modified files so as not to break upgrades or portal moves? Do I create html/portlet/blogs under WEB-INF/classes?

What type of changes are you making? You can probably use a plugin Hook for most of your needs. Take a look specifically at JSP Hook and Portal Service Hook

I'm not sure a hook will be good enough. I want to add additional configuration parameters of the portlet, change/add the JSP display, allow anonymous comments, and maybe add 3 additional fields.

hi aaron,
create an Ext Plugin for the bolgs portlet , it would be a good option i thik.