BuddyPress.org

The GroupBlog plugin does not fit into that structure really well. While it does some of it, it really is going a different direction in its approach. You’d be best to take a look at this plugin:

https://wordpress.org/extend/plugins/bp-community-blogs/

It is no longer under development for a year and will not be updated either. It will not work with 1.2, but it does do what you desire. You could at least use that as a starting point and port the code to bp1.2.