Firstly, what applies to all of my following comment is that these rules are personal guidelines developed from the large amounts of text I've written for the website. Obviously, they are not canon, but I do believe them to be beneficial to authors who are not getting the most out of these elements--adjust to suit.
1. What is a dictionary, if not defining terms? A dictionary does not spell out acronyms only, it defines a term in full text.
"If the title attribute of the dfn element is present, then it must contain only the term being defined."
That doesn't state that you must only use an exact word-for-word expansion of the acronym, it just says to keep your definition to the thing inside the element. If I want to write a full dictionary definition of a term, that's still valid, I just can't discuss bacon when I'm defining garage doors.
2. This gets complicated because unfortunately the spec is woefully unrealistic and unhelpful. The cite attribute of blockquote says that it only allows URLs, which is totally useless for quoting things that are not on the Internet, or exist on networks outside URI schemes (like e-mails and such). Because of this authors have just had to violate the spec in spirit to find something that suits them. For me, this is putting a cite element within the blockquote.
Authors can and _should_ violate the spec when it is not serving their needs. This is how it evolves, just as Shakespear was not bound to the limits of the English language at the time. Consensus should be guidence on usage.
Alternative markup could be to use a blockquote in a figure, so that the figcaption can be used for citation.
3. As for not using cite for website names, this one is a little tricky to explain, but comes out of common writing patterns. When you link to a particular blog post, it is because it is somehow involved in what you are discussing i.e you are replying to that particular blog post's content, not the blogger's whole website! I found that in my writing, when I was linking to a website wholesale, it was not forming a meaningful citation, yet when I linked to specific articles, they were. If the individual articles could be analogous to books, then the website is analogous to the publisher--and you wouldn't use cite if you were naming a publishing house, because you are not referring to any actual content!
There's nothing stopping you from using cite on website names of course!
As for URLs, : and ) are completely valid URL fragments; there's no real way to tell if they are part of the URL or part of the text. What if a URL actually does end in : or ), should I break those?
I think the solution is to just ignore : and ) on the end of URLs because I think URLs that end as such are rarer than the occurance of people putting punctation at the end of their URLs and not expecting them to break.