There already exists a $custom_theme variable in Drupal - suggest using something else!

Just a minor suggestion - global $custom_theme is used to override the main $theme variable. Obviously your $custom_theme as per the code on the main project page http://drupal.org/project/blocktheme is different, but this could cause confusion.

Also I find the function name blocktheme_get_theme() in the context of [yourtheme]_block($block) confusing since the word "theme" is used to mean both the site theme and a "type" or "class" of block (for themeing purposes). (Actually could use phptemplate_block($block) anyway here, but the use of "theme" in blocktheme_get_theme is still a bit confusing to a poor old soul like me!)

Hope this helps!