We show that a certain class of vortex blob approximations for ideal hydrodynamics in two dimensions can be rigorously understood as solutions to the equations of second-grade non-Newtonian fluids with zero viscosity and initial data in the space of Radon measures M (R 2). The solutions of this regularized PDE, also known as the isotropic Lagrangian averaged Euler or Euler-α equations, are geodesics on the volume preserving diffeomorphism group with respect to a new weak right invariant metric. We prove global existence of unique weak solutions (geodesics) for initial vorticity in M (R 2) such as point-vortex data, and show that the associated coadjoint orbit is preserved by the flow. Moreover, solutions of this particular vortex blob method converge to solutions of the Euler equations with bounded initial vorticity, provided that the initial data is approximated weakly in measure, and the total variation of the approximation also converges. In particular, this includes grid-based approximation schemes as are common in practical vortex computations.