Essentially, this article advocates an 'old' alternative to banner/pop-up advertising: sponsoring the whole site, or even just a piece of it. A blog just happens to be a website in one of its purest forms.
Managing conflict of interest is the big rub, but two ethical parties should be able to do that just fine. Caveat emptor applies.
Sponsored content is commercial web content that could really work -- supported by a number of viable revenue and value models such as subscription, microbilling, donation, packaging with other paid services such as user support, brand exposure, etc.
Also, if Andrew Sullivan is making that much dough from donations, it suggests that a star system is emerging and undoubtedly carries with it financial and cultural implications (such a system revolutionized movies and music).