I've installed wordpress on my small site situated at www.example.com/blog. on www.example.com Let me retrieve the very best 5 latest blogs and display date, url and blog title. Is possible?

What this means is I wish to obtain the blogs from outdoors the wordpress installation using php and perform a loop.

Use Wordpress_Query like sugested by Sepehr and once you include wordpress-blog-header.php add this:

header("HTTP/1.1 200 OK")

This overrides WP's security check.

<?php
    $loop = new WP_Query('showposts=5&orderby=ID&order=DESC');
    if($loop->have_posts()): while($loop->have_posts()): $loop->the_post();
?>
    <div class="post" id="post-<?php the_ID(); ?>">
        <a href="<?php the_permalink(); ?>"><?php the_title(); ?></a>
        <span class="post-meta">
            <?php the_time('F jS, Y'); ?> by <?php the_author_posts_link(); ?>
        </span>
    </div>
<?php endwhile; else: ?>
    No recent posts yet!
<?php endif; ?>

See: WordPress Loop, query_posts(), WP_Query(). You will find also plugins to obtain recent posts.

Yes you should use the Feed of the blog. Its a typical wordpress feature. Make use of a javascript (or some server side) rss client to fetch the very best 5 records from Feed and show it in your home page.One particular script is http://p3k.org/rss/