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There are many routes you can take with your new blog to drive traffic. One of the most cost and time effective strategies is to determine your most effective keywords.  These are ones that are driving traffic and sales to your site already. If these phrases are low on the first page of results, or on the second page AND sending you leads, these are the phrases to target first in a blog post to get them higher in the search results. The duplicate content will only happen if you copy exact product descriptions from the main part of the site onto the blog.  As for categories vs. products, it really depends on your top keywords and your goals.  If you are in a micro niche, it may be better to lean towards products. Don't let these choices freeze you up, though.  Make related original content as you flesh out a plan and stay consistent!

Did you end up removing the rel=canonical tag? I don't see it in your source. If you did, that is the right move. Canonical link tag should be used as a last resort. And should only really be used if you are currently having canonical issues or the CMS/cart you are using is known to have these problems. Ideally canonical problems should be fixed from a technical standpoint first.