In my experience there's a couple of key points to doing well with autoblogs:
1. Don't appear to be an autoblog. A tiny investment of time to make your blog layout/theme appear unique goes a long way in getting repeat traffic (I get tons daily), encouraging visitors to "tell a friend" (my "email this story to a friend" forms get used often from my auto blogs), get other human bloggers to link to your auto generated pages and avoid being dropped from SERPs
2. Have unique content without rewriting it into gibberish. I've seen rewritten content that wasn't even readable to human eyes. Sure it was keyword rich, but nobody is ever going to revisit those pages and eventually the search engines catch this and dump them.
There's several ways to do it, my preferred method is to not pull my content from a single source ever. Instead, I create my auto-blogs using small chunks of content from multiple places for each post, like a mashup. The SE spiders love it, it provides your visitors with a resourceful page on the topic they're interested in and there's nothing dubious about it to get you reported or dumped from the SE's.
Think of technorati, what is any page on technorati? It's a basic mashup built from small chunks (snippets) pulled from multiple rss feeds. I just apply that same design to my auto-blogs and it works well.
And the SE's really do see this as "unique" content because my posts are never more than about 15% similar to any other page on the web since the content is coming from so many multiple sources. That's why mashup sites always rank so well with SE's.
3. (most important) Promote your autoblogs. The biggest mistake I think people make is to think you just set them up and never have to do any basic link building for them.
Social bookmarking and pinging isn't enough, there's hundreds of others doing that too for their sites, why should/would an autoblog out-rank them?
A few minutes every now and then to get some additional deep links (links to individual posting pages) for your autoblog will pay huge returns.
Just remember that "autoblog" means auto generated content pages, it doesn't mean automatic rankings or traffic. You still have to do some minimal work for those, the automated content generation just gives you more free time for doing that work.
Hope that's helpful.