It is probably just me not looking hard enough or, perhaps, just not knowing enough (i.e. maybe everyone who installs PyBlosxom with Apache2 just knows this) but I couldn't find anywhere on the Web or the PyBlosxom 2 documentation the details of how to make Apache2 do the right thing. The PyBlosxom documentation itself says nothing but I did find How to Install PyBlosxom, Section 1.5 of which at least had something but it wasn't really the right answer.
I hassled Ross Burton as is traditional for me in this sort of situation and after a few email exchanges put some rewrite rules into the Apaches2 configuration file -- you can also use .htaccess files of course. Here is the relevant Directory section:
The trick of redirecting everything through a dummy URL may well be standard and in hindsight it is obvious but it wasn't until Ross told me about it. (Many thanks to Ross for answering all my emails with patience and real facts.)