I would have to check to be sure but it may well be that since your contact would not be able to update it's information from your MSN details it is possible that they would only see the information that they saw the last time you unblocked them. If I get a minute I'll have a tinker with Chi's messenger while she isn't looking lol
edit
Just checked and all they will see is what was displayed the last time you were showing as online to them. Even if you change while showing offline your info will not change to them until you unblock them again.
So to clarify, your display information will not update for blocked contacts until you unblock them.