1. If a bear shits in the woods and nobody is around....i.e., what is the relevance of the obscurity/traffic of the blog that publishes the defamatory material? There is a difference between something appearing in a large daily newspaper or high traffic website and something technically available to all on the Internet but on a site that has insignificant traffic. Can a reputation be harmed in the community in those circumstances?
To me this gets the situation upside down.
Or, to put it another way, if I wanted to damage a person by defaming them on-line, I wouldn't worry too much about the amount of traffic I attracted to my blog or whatever I was using as the vehicle for my attack. Rather, I would worry about where the stuff I wrote about that person ranked in a Google search. As someone whose real-life job occasionally involves sniffing around the net trying to discover whether a particular (usually IT-based) company is a respectable enough business partner for my employer, I can tell you that if you apply for any position above burger-flipper someone in HR is going to run your name through google, see what you're up to on Facebook, and etc. If the first ten google entries about you all claim that you're a pedophile (for example), your resume will be moved to the bottom of the pile. Nobody is going to waste time testing the truth of these claims, and nobody is going to tell you why you didn't get a follow-up call. You just won't get one.
This, by the way, also works as an argument for working to remove Hate Speech from the Net. Here's what you get when you search for information re the oft-made claim that Anne Frank's diary was a hoax. The loons rule the top of the search results. Through sheer determination, they have swamped any saner discussion of the matter. But note that these sites do not themselves have to be particularly high volume to make the top of the list.