I've been playing 5 0 blitz on FICS and ICC pretty much daily now, and it seems like it's starting to work out for me. I'm currently 1447 on FICS and 1431 on ICC 5-minute, and feel quite solid. Naturally there's the occasional dive below 1400, but it always bounces back.
So, what's changed? It's not easy to say, but suddenly it feels like my opponents are just throwing the games away. The same thing happened when I started getting better at slow chess, so now I already know it's real instead of imaginary progress. The things that once were hard, begin to seem easy after you internalize them.
I think I'm just more used to the positions I get, so that I don't miss the usual dangers that often anymore. I can also find the plans faster, and even win endgames. -It's been extremely satisfying to win the occasional pawn endgame by zugzwang, something I just always missed in fast games before. I think blitz has taught me to be more aware of what's on the board in general. The dangers, the possibilities, the weaknesses, the potential.
I've also gotten better at making reasonable moves instead of best moves, which has translated into better time managment and less tactical mistakes. Prophylactic moves are another new thing, which I almost never thought of in slow games before. Take a certain square away, and you sweep off a whole bunch of nasty problems which could or could not work for you. Very handy in blitz.
Another thing I've learned is to not force attacks when there isn't one. Just do a sane move instead, and let the opponent use his time on the position. Do something constructive instead: Remove a weakness, build an attack, activate. Those things usually require very little thinking time, but will give you better statistical chances later in the game.
"Experience can't be bought or read from a book, the only way is to live through it." -Can't remember where I heard that, but it seems to describe chess improvement the way I see it quite well.
FICS br: 1447, 1155 games, +561 -579 =15.
ICC 5-minute: 1431, 812 games, +386 -416 =10.