Why not both? It doesn't need to be mutually exclusive; write md2blog.html so it can run either from the command-line or be opened in the browser—whichever is preferable (easiest) at the time.
I don't understand your comment about durable storage. If you have a directory of Markdown files on your disk, that's already durable storage. I'm just talking about tweaking the development approach so the site generator's business logic can run using the browser process's JS runtime that's almost definitely already in memory. md2blog.html would be written to accept the same directory that the current incarnation reads; use ordinary file APIs—the input element or drag and drop. "Web app data" (I think you're talking about localStorage?) would only seem to come in after starting to expand the scope of the tool and is a separate matter.