Will making my blog dofollow damage my ranking due to the outbound links? (obviously I would be moderating spam)
If you moderate all outgoing links you should be fine, make sure you don't link to sites that are not SE friendly like warez, porn etc.. and you should be ok. Remember you're the one responsible for all outgoing links so if you don't moderate it properly it could all go haywire. PS: If you're going to change you blog to do-follow expect a flood of spam.
it shouldn't affect things too much if you have good content and are building your own backlinks by do follow bloggig. A number of do follow blogs have a good Page Rank, so i wouldn't worry. It will defeintely help you on the visitor traffic front.