(last edit: 2013-02-03)

This is knowledge collected from various places. I like to write down what I do, so these steps described below have worked for me once.
THERE IS NO GUARANTEE that it will work for you too - there seem to exist some different hardware versions with evil different features …
So, if you're a lawsuit, STOP READING HERE! It's your private bad luck if you transform your new phone into a BRICK.

Get yourself one of these cheap Chinese phones!
These ZTE Blades were delivered with Android 2.1 and TFT display, HW Generation 1, unbranded, unlocked.
Things get easier if you have already a Gmail account and therefore Market access.

First of all you have to void your warranty by „rooting“ your phone Remember, it was cheap!

* Method (A): If you don't yet have Market access, you can download more or less reliable *.apk files from Internet and copy them to your SDcard's root directory.

* Method (B): If you already have an Android device with Market access, you can install the app „appInstaller“ which enables you to write *.apk files from your already installed apps onto your SD card. In this case you can be almost sure you won't get malware apps.

* So, you'll need the following *.apk files:

• „ManD5.apk“

or

• „Hash Droid.apk“

for MD5 checking. You know, installing from corrupted files will brick your phone!!

• „Pigfish.apk“

* Install these two *.apk files by means of the „filer“ app which is already installed on your device.

* Download „Universal Androot 1.6.2 beta 5.zip“ from http://www.addictivetips.com/?attachment_id=41115 , then unzip it.

UniversalAndroot-1.6.2-beta5.apk - MD5:e37d6c0b28c0a94e7b0a94702d5b18da

* Download „RecoveryManager_v0.36b“ from http://android.podtwo.com/recoverymanager/RecoveryManager_v0.36b.zip , then unzip it.

RecoveryManager_v0.36b.apk - MD5:ce777b6c1a06f8a8833217c3a9671c14

* After verifying their MD5 sums install these two *.apk files by means of the „filer“ app which is already installed on your device.

* Launch the „Universal Androot“ application and follow onscreen instructions to root your device. Don't click option checkboxes … maybe you have to try for a few times. There you go!

ATTENTION! There are two generations of this phone out in the world.
If you got the first generation, you are safe and you can follow this guide.
If you have bought a Generation 2 model, DO NOT continue with this guide or you will brick your phone! Generation 2 will be supported soon, hopefully.

* Run „Ask Mr Pigfish“. At the top of the screen, the app will tell you whether you have a „G1“ or „G2“ (first or second generation) phone.

* You must decide whether to proceed now … only G1 devices are documented here.

* Download and install „recovery-clockwork-3.0.2.4-blade-g1.img“ from http://android.podtwo.com/recovery/recovery-clockwork-3.0.2.4-blade-g1.img

recovery-clockwork-3.0.2.4-blade-g1.img - MD5: 8bdd0433953788a75bebd0c2899de0df

* PLEASE, verify the md5sum of recovery-clockwork-3.0.2.4-blade-g1.img!

* Download „Swedish_Spring_RLS5.zip“ (120.7Mb system, unresponsible touchscreen fixed!) from http://www.mediafire.com/?iv91d1edrd2iytj

Swedish_Spring_RLS5.zip - MD5: c801fdad511944c9cee7139e866e160c  

* PLEASE again, verify the md5sum of Swedish_Spring_RLS5.zip!

* Use „RecoveryManager_v0.36b.apk“ to install recovery-clockwork-3.0.2.4-blade-g1.img

* Perform a „reboot into recovery“ OR shutdown & switch on while „VOL-“ key pressed.

* You might want to backup your old system to SDcard now! Then you may at any time revert to the original, functional version. But, doing so is unsportsmanlike!

----  note in between ----
What is inside clockworkmod backup images?

image name       |    file system used
-----------------|---------------------
boot.img         |    ANDROID	??
cache.img        |    yaffs
data.img         |    yaffs
recovery.img     |    ANDROID
system.img       |    yaffs

... ??
What about tools for ANDROID images .. 
... hmm?
--------------------------

There' s a simple and straightforward tool to open yaffs images. Get it here: http://code.google.com/p/unyaffs/downloads/list
NOTE: Creating yaffs images on your own needs some Linux kernel features (MTD, .. ) enabled.
Do your own research here: http://processors.wiki.ti.com/index.php/MTD_Utilities

* Now it is better to plug in the device's USB power supply. We don't want to see what happens on battery failure while updating.

* Shutdown your phone, switch on while „VOL-“ key pressed –> You see? Clockwork Recovery menu is here! This feature will persist now. Operation only by keys, no touchscreen needed or supported.

* „Vol+“ and „Vol-“ keys select menu entries, „Home“ works like an ENTER key. Escape escapes. As you expected it.

* Navigate to „wipe data/factory reset“ and intentionally press „home“ key at the „YES…“ selection line.

* Likewise „wipe cache partition“ as well.

* Back at main recovery menu: scroll down to „install zip from sdcard“ option and select the Swedish_Spring_RLS5.zip file from SD Card.

* The entire system update takes place NOW. You have to wait for the procedure to finish. !! DON'T TOUCH UNTIL READY !!

* In the end, a message like „Install from sdcard complete“ should appear …

* Escape once, then select „reboot system now“ - now we are ready, hopefully. Otherwise you got the first brick of your new house.

* Select system language and kezboard.

* Calibrate touchscreen.

* Setup a WLAN connection or find your own way to the internet.

* Setup your Google account.

* These apps are already included in Swedish Spring package:

 - Alarm
 - Anrufe
 - Automodus 
 - Browser
 - Camcorder
 - E-Mail
 - Einstellungen
 - Extra Settings
 - File Manager
 - FM Radio
 - Galerie
 - Gmail
 - Kalender
 - Kamera
 - Kontakte
 - Latitude
 - Maps
 - Market
 - Musik
 - Navigation
 - News und Wetter
 - No-frills CPU Control
 - Notizblock
 - Places
 - Rechner
 - SIM-Toolkit
 - SMS/MMS
 - Soundrekorder
 - Spare Parts
 - Sprachsuche
 - Stoppuhr
 - Suche
 - Superuser
 - Talk
 - Taschenlampe
 - Task-Manager
 - UKW-Radio
 - Videos
 - VM Heap Tool
 - Wähler
 - YouTube

* These apps should be installed on every device in my opinion

 - Advanced Task Killer
 - Android System Info
 - AndroXplorer
 - App2SD - Save phone storage
 - appInstaller
 - Compass
 - HomeSwitcher for Froyo
 - Launcher Pro
 - Leo
 - ManD5 Free
 - Maverick
 - MultiTouch Tester
 - Pigfish
 - Ping
 - PrintBot
 - QR Droid
 - Quick Pic
 - Real Calc
 - Recovery Manager
 - Samba Filesharing
 - SpeedView
 - SSHDroid
 - TuneIn Radio
 - Universal Androot
 - Wasserwaage
 - WiFi Manager
 - Yaffs Explorer

NOTE: you need to run „HomeSwitcher“ if you want to set Launcher Pro as your default launcher!

* These apps are nice to have, anyway

 - Angry Birds
 - Astro Datei-Manager
 - Documents To Go
 - Dolphin Browser HD
 - Droid Wall
 - Fill and Sign PDF Forms
 - Google Sky Map
 - Hash Droid
 - History Eraser
 - IP Webcam
 - Metal Detector
 - Mundl Jukebox
 - Network Discovery
 - Open Office Document Reader
 - OsmAnd
 - Quadrant Standard Edition
 - SENA BTerm
 - Webkey (ROOT REQUIRED)
 - WhatsApp
 - Wigle Wifi Wardriving
 - XBMC remote control

There is a very nice tool available for USB debugging.
Sadly, http://developer.android.com/sdk/index.html do no longer provide an easy-to-get adb commandline tool.
So I simply ripped the current version from an installed android-sdk_r16: adb-1.0.29.tgz

Linux users should be aware that the initial adb daemon stuff has to be started as root.
If you don't, no errors are reported but things won't work later.
Even worse… if you immediately invoke some adb commandline as non-root, adb starts the said daemon automatically before noticing it hasn't enough rights!

You can write your own init script for this purpose. The adb binary should be put in a place like /usr/local/bin before.
Like this quick & dirty example of /etc/init.d/adb: adb_initscript.tgz

CAUTION: for installing lsb-style initscripts under Debian Squeeze read this before: http://wiki.debian.org/LSBInitScripts There must be a comment header in each script decribing dependencies etc. The insserv tool will then define the appropriate start and kill links in the /etc/rcx.d dirs.

Quick lesson:

man insserv

For dry run & seeing what would happen …

/etc/init.d# insserv -vn ./adb

Anyway, first thing is (as root) to invoke

adb start-server

Now you can - even as normal user! - do things like listing connected devices:

adb devices 

List of devices attached 
CSE_P729V       device

Or just read the serial#:

adb get-serialno

CSE_P729V

Try this, it is very useful for examining your device's filesystem:

adb shell

# ls -l
drwxrwxrwx system   system            2011-12-27 20:11 var
drwxrwxrwt root     root              2011-12-27 20:11 sqlite_stmt_journals
dr-x------ root     root              2011-12-27 20:11 config
drwxrwx--- system   cache             2011-12-27 20:11 cache
lrwxrwxrwx root     root              2011-12-27 20:11 sdcard -> /mnt/sdcard
drwxr-xr-x root     root              2011-12-27 20:11 acct
drwxrwxr-x root     system            2011-12-27 20:11 mnt
lrwxrwxrwx root     root              2011-12-27 20:11 d -> /sys/kernel/debug
lrwxrwxrwx root     root              2011-12-27 20:11 etc -> /system/etc
drwxrwx--x system   system            2009-11-13 21:37 persist
drwxr-xr-x root     root              2011-12-27 14:16 system
drwxr-xr-x root     root              1970-01-01 01:00 sys
drwxr-x--- root     root              1970-01-01 01:00 sbin
dr-xr-xr-x root     root              1970-01-01 01:00 proc
-rwxr-x--- root     root        17464 1970-01-01 01:00 init.rc
-rwxr-x--- root     root         5007 1970-01-01 01:00 init.qcom.rc
-rwxr-x--- root     root         1677 1970-01-01 01:00 init.goldfish.rc
-rwxr-x--- root     root         8813 1970-01-01 01:00 init.blade.rc
-rwxr-x--- root     root       111900 1970-01-01 01:00 init
-rw-r--r-- root     root          118 1970-01-01 01:00 default.prop
drwxrwx--x system   system            2011-12-27 20:11 data
drwx------ root     root              2011-03-28 16:40 root
drwxr-xr-x root     root              2011-12-27 20:19 dev
# 

Here is the link to the official documentation: http://developer.android.com/guide/developing/tools/adb.html
BTW… it is wise to have USB debug mode enabled on your phone. It's the last way to read out any internal memory data if e.g. your display is cracked.
The adb connection works even before the time when your phone asks you for the SIM card's PIN code!

It is interesting to retrieve the running kernel's config from the Android device:

adb pull /proc/config.gz .
gunzip config.gz

.. for Swedish_Spring_RLS5 it looks like this: config.gz

First I thought, just get me this one… http://download.cyanogenmod.com/get/update-cm-7.1.0-Blade-signed.zip
Or whatever is newest or stable. - So I updated my Gen1 phone with Cyanogen, it ended hanging in a boot loop. Oh, no!
Cyanogen now needs the modified memory layout found with Gen2. But I could revert to Swedish Spring without troubles.

Better first read the German HowTo here: http://www.android-hilfe.de/root-hacking-modding-fuer-zte-blade-osf-lutea/117339-how-gen2-konvertierung-via-tpt-cm7-install-via-clockwork-zurueck-zum-stock.html

There is a all-in-one tool which converts your phone to Gen2 memory layout (2MB cache, 160MB system, 294MB data, 0.1MB OEM).
If you dislike the download mirrors from the German HowTo link above, take this one: http://depositfiles.com/files/ss09wqrro

Gen1-to-Gen2-TPT-v10-custom.zip - MD5: 3b41b8c9dbf06cd9c33f91a728885633 \\

Inside this zip you will find a single folder named „image“. It must be unzipped and copied to the SDcard root.
Please, before continuing, verify the MD5 sums inside the folder against the text file „md5sum“ located in the folder itself.
(I'm using a Linux PC with a USB-MicroSD adapter. So I got all tools on board )
Furthermore copy the cyanogenmod-update.zip to the SDcard root now and check its MD5 sum too!

Finally, insert the SDcard into your already rooted Gen1 Blade with Clockwork recovery, put a FULLY CHARGED battery in. Eventually disconnect the USB cable.
Switch the phone ON while keeping the „Vol+“ and the „Menu“ button pressed. The „fastboot“ program will do the rest, showing the progress of bricking in green letters.
After the following boot into Clockwork Recovery you may install the cyanogenmod update.zip as usual.
Finally, the big fat Android should appear and start skateboarding

If you don't like a de-googled phone, you must install the Google Apps now (which are provided in an extra *.zip for legal reasons).

* Download „gapps-gb-20110828-signed.zip“ from http://www.mediafire.com/download.php?ophq5hy81fz65na .

gapps-gb-20110828-signed.zip - MD5:b92803ed7442af042361aa7cecd7c48f

This is a modified version with a disabled Market updater („MarketUpdater.ap_“). The Market app itself is named „Vending.apk“.
You cannot copy some of these apps straightforward to the phone using the „adb push ..“ command.
So you have to follow the intended procedure:

copy the gapps..zip somewhere onto the SDcard, then .. \\
reboot into recovery, choose "install zip from SDcard" and act like a man.

Saving is easy: just write a *.vcf file to SDCard root. This can be edited externally as you please.

Restoring can be more difficult:
The „contacts“ app menu (in the Cyanogen version) lets you „import from SDcard“ what performs a merging procedure.
So all existing entries are left untouched AND all entries from any *.vcf file found on the SDcard are added.

To cleanup the mess, you can do the following hack:

adb shell
cd /data/data/com.android.providers.contacts/databases

There are three files like these:

# pwd
/data/data/com.android.providers.contacts/databases
# ls -l
-rw-rw----    1 app_3    app_3       520192 Mar  4 22:29 contacts2.db
-rw-rw----    1 app_3    app_3        32768 Mar  5 13:23 contacts2.db-shm
-rw-rw----    1 app_3    app_3       220112 Mar  4 22:29 contacts2.db-wal
# 

Kill these before merging!

# rm *

You are root, you are allowed to do so!

Have a lot of fun!