This issue has absolutely nothing to do with the associations system or the template you have referenced. The most likely issue is that another module is loading on /blog/. For example, do you have a CMS page setup that has the URL key of 'blog' and is disabled? Alternatively, do you have a disabled Category setup with the URL key of 'blog'. If either is true, delete the page/category and it will work.
If that isn't the case, check whether you have the AW_Blog module (or another _Blog module). These modules set 'blog' as their frontName in config.xml. This means that Magento passes all requests to this module if the URL starts with blog/, even if the module is disabled in the configuration. Disabling this module properly (in the app/etc/modules/AW_Blog.xml file) will fix the issue.
If AW are listening, you should set your frontName as something unique (eg. aw_blog) and then route requests for /blog/ dynamically. This would allow both my module and yours to work together!