I know that Wordpress blogs are already SEO optimized, but to what extent? Can the SEO on a Wordpress blog be improved manually?
There are various ways to SEO your blog. As dcristo said I would install the All-in-One SEO plug in. Then properly configure it.. take your time to do this.. as a mis-configured All-in-One SEO plug in wont do you any good. Then content writing.. make sure you research your main keywords and use those in your blog posts.. Also use keywords in your blog post titles. That should keep you going for a while
The on page SEO effect is very Limited for Google optimization my suggestion is to go get yourself links, too many links
Your theme might play spoil-sport to wordpress SEO so you have to keep in mind that your blog doesn't have duplicate content pages because of your theme. All in one SEO package is very useful in getting rid of duplicate content and putting custom title, description etc. for every blog post. Wordpress is probably the 'most' optimized (onsite) CMS of present times.