Edited: Removed fluff, made main questions clearer
Trying to compete in an already-competitive niche is going to be, as you point out, near-impossible if you don't have "a fair bit of luck and friends in the right places."
However: there are plenty of niches out there waiting to be cultivated.
If I had your dream, I'd start from the other side. I'd be asking myself what knowledge do I already have, and am interested enough in to spend significant effort deepening, that would be of interest to some small-but-not-absurdly-tiny group of others?
With the right niche, angle, and persistence, you could start a blog that you could make a living from, I'm pretty confident of that.
The main thing I'm interested in, and I'm sorry this isn't clearer, is that if there are any blogs that have broken into the big leagues recently.
You grandmother or landlord probably don't know about TechCrunch or Engadget, and certainly wouldn't consider them "the big leagues".
If you're really interested in Tech Blogs, though, you should take a look at Technorati's Top 100 (http://technorati.com/blogs/top100), and run whatever analysis seems interesting to you.
Now impossible for new companies to break into the big league ?
The difference is, it's no longer 'free'. Nothing is impossible, but it is just as much hard work to establish a new, quality blog as it is to establish a website or a new corporation versus the time when there landscape was bare and every new thing was interesting and an instant hit.
Except of course all those that failed...
The mark of a real entrepreneur is that he or she does not shy away from competition, but rather learns from it and uses the competition as a benchmark, something to be improved upon. If you do that you'll find there is still room for new entrants.