Have you reached out to the theme developers? You paid them for the theme, so technically they owe you a higher level of support than what we are providing you. If they find the problem is with our plugin, they would contact us appropriately with the steps we need to take to correct it.
One detail may have hit the mail on the head. It sounds like BlogsMU is including it's own version of the jQuery library, using jquery.js. It should be using the call wp_enqueue_script('jquery'); and using the version of jQuery packaged in WordPress. (I need to see the BlogsMU source to confirm this)
You may find this gets resolved when you upgrade to WordPress 3.1, since it has the latest versions of jQuery at present. (PowerPress doesn't package it's own versions of jQuery tabs UI, it uses the one packaged with WordPress.
Also, I don't think the jquery-ui-tabs issue with BlogsMU is exclusive to PowerPress. If you do a Google search for "BlogsMU jquery UI tabs" you get some results of other plugins having similar issues.
Unfortunately, I no longer fix theme issues with PowerPress without the involvement of the theme developer first. I've done it in the past with mixed results, most tell me to take a hike, only a handful accept the code fixes. Please reach out to the developers of BlogsMU, ask them if they are interested in getting this problem fixed with PowerPress to contact me at cio [at] rawvoice.com.