WordPress widgets uses an excellent ajaxian UI where you drag and drop widgets (blocks) into columns that represent regions so you can see how they will show up and can re-order them by drag and drop. Given most Drupal Themes arrange blocks vertically inside regions, this would seem to be applicable as well, though a horizontal region should be representable the same way. Then you click on that block in the GUI to bring up other block configuration options like block title, contents, etc.
Drag and drop might remove the need for setting weights the way we do it now.
In this case I would suggest the blocks be arranged by region as you suggest, but also by template. I tend to use multiple page templates, so a tab in the block administration interface for each template in a theme would be useful as well. each tab would give you another visual representation of the block arrangement.
Permissions-based display of a lot of blocks (i.e. in an OG install) would make this kind of interface a challenge in a high N block environment, but I must say, I love the way Wordpress Widgets does it. In the case of a lot of blocks, you could allow the user to scale the GUI so blocks are smaller, and then they magnify on mouse- over like the icons in the Mac OS X Dock. And then we could solve all the pain and suffering the world and end war forever. :-)
I'm jumping in in the middle here so I hope I'm not redundant. Please ignore if so.
evan
I like these thoughts, fact is that I was going to write something simular when I got the time... However, how about non javascript browsers?