softlord, I don't .. quote get why you would use WP-O-Matic to make a page like this. Really. Why do that? You probably know?
So perhaps the following information is worthless? regardless, this is the /mu-plugins/ code I use..
(in mu-plugins) provides the function
that version only the beginning of latest posts (put it in the theme used on the WPMU primary blog)
You may take a look at http://trykker.com/ to see what it does.
http://hippoporn.com/ uses basically the same code but slightly different so it shows you the full posts. If you want me to post that version then sure, just ask.
BEWARE: I do not have any WPMU installation which uses subdirectories. Maby that functino has to be modified to work with subdirectories.
I looked at WP-O-Matic and decided to go with FeedWordPress for http://bloggoversikten.com/ - which shows the latest posts from Norwegian blogs. Here we are pulling EXTERNAL blogs and showing them. You are asking in the WPMU forums, so I assume you are using that for your subdirectory blogs - and if that is the case THEN YOU ALREADY HAVE the posts, you don't need to pull them, only SHOW THEM? (which is why I don't get why you'd use WP-O-Matic).
anywayz... g00d luck.