have you checked the blog url in wp settings?
what you are experiencing is an infinite loop as a result of the redirect, wp has a basic site url reference built in you probably need to update it to the path you want
most likely it is set as
http://mysite.com/blogand with your rewrite it is trying to make it
http://www.mysite.com/blogthen wp tries to make it
http://mysite.com/blogwhich will then loop
go to wp admin
then settings and update your blog url