Is the Corner not the best? A thoughtful lawyer who knows a lot more than I do has answered my questions:

My understanding is that blue slips historically have been to signal approval of — or, more to the point, block — appellate nominees, not just candidates for the federal district courts. See this web page, for instance, which tracks the blue slips that were received during the 107th Congress.
North Carolina is a good example. The reason why Terry Boyle has been waiting since May 9, 2001 to be confirmed to the Fourth Circuit (actually, he’s been waiting a lot longer than that, since he was unsuccessfully nominated to the same post by Bush 41) is because then-Senator John Edwards refused to return a blue slip for him. I understand that then-Senators Jesse Helms and Lauch Faircloth likewise refused to return blue slips for at least one of President Clinton’s Fourth Circuit nominees from North Carolina — apparently in retaliation for the Democratic-controlled Senate’s refusal to confirm Boyle the first time around.
As I understand it, the policy that prevailed under Chairman Orin Hatch (both during the Clinton Administration and the current president’s first term) was that the Senate Judiciary Committee would not consider a nominee if both home state senators failed to return blue slips. But if one of the home state senators was a member of the Judiciary Committee, that senator singlehandedly could deep-six a nomination by refusing to return a blue slip. There are exceptions to the rule — Chairman Hatch held hearings for all four of the Michigan-based nominees to the Sixth Circuit, despite the fact that Senators Carl Levin and Debbie Stabenow returned negative blue slips for each.
As for your other question, a senator is able to blue slip only those nominees that would sit in that senator’s home state. So Senators Helms and Edwards would be able to prevent the confirmation of North Carolinians, but not of Virginians or Marylanders. (As you know, each state is allocated a certain number of appellate judges, but these numbers are not always honored. Hence, Bush 43 nominated Claude Allen of Virginia to fill a Fourth Circuit seat that had been held by a Marylander; if successful, the Allen nomination would have “moved” one of the “Maryland seats” to Virginia. Notice also that the blue slips for Claude Allen were sent to Virginia’s John Warner and George Allen, not Maryland’s Paul Sarbanes and Barbara Mikulski.)
To state the obvious, there aren’t any home state senators for Washington, DC. So the upshot of the Adler proposal is that nominees to the DC Circuit would be confirmed as a matter of course (assuming they have majority support in the Senate).
[Name withheld]