Bryan, Two weeks ago Google came out publically and confirmed that they have changed their policy regarding nofollow, a consequence of which is they now do not recommend page sculpting. Read deatils on thsi here: http://www.mattcutts.com/blog/pagerank-sculpting/

Nonetheless I fully follow your logic, but i am not convinced what you are doing is worth it. You are concerned that the words "Read More" have a poor sematic correlation to the contain of the page they point to. What you are doing probably can give a marginal increase in the 'semantic signal' a search engine has of the  target blog entry. But at the same time each one of those nofollowed 'read more' links will reduce the amount of availalbe 'link love' that is actually passed on to the blog entries (ref. the diagrams in Matt Cutt's blog post linked to above). You gain with one hand (marginal increase in semantic signal) and lose with the other (reduced link love passed on to blog entries). The net gain will probably be marginal at best, but could also possibly will reduce your overall SEO.

Conclusion? I advise that you do not nofollow the Read More links (and as things stand I'd advise my fellow blog module team members to keep this as-is in future versions of the blog module).

Any other views out there on this? I'd be keen to hear them.