Paul Hayes swept home his 12th goal of the season from Donal McDermott's cut back in first-half stoppage time to clinch Scunthorpe their first ever win at Bramall Lane in just over 50 years of trying.
Defeat for the Blades, depleted by injuries all season and with seven first-team players still sidelined, is a hammer blow to their play-off chances as they trail sixth-placed Leicester by seven points with six games remaining.
Blackwell, once again the target for the Bramall Lane boo-boys, said: "If you're going to be manager of a high-profile club you have to take stick, rightly or wrongly.
"Anybody that saw the team there today realises that seven of them either aren't my players or aren't going to be here in six weeks' time.
"We're disappointed. The staff this year have been absolutely phenomenal to keep us where we are.
"I think (goalkeeper Steve Simonsen) Simmo was the 23rd debut in a season. When was the last time Sheffield United had five goalkeepers in a season never mind 23 loans?
"We've had 39 players play for the club this year. That leads us to be in the situation we're in, so to be up near the top with seven games to go has been a phenomenal achievement by the staff."
Blackwell added: "As one of my management roles this is one of the best jobs I've done.
"I could go on and on about the number of (loan) players who aren't my own, so it's been a terrific feat by my staff up to today to make sure we can perform.
"Temporary staff give you temporary performances and that means up and down, good and bad, and that's exactly what we've been like."
Scunthorpe, who beat the Blades 3-1 at Glanford Park in October, made it three straight wins to climb eight points clear of the relegation zone and the significance of their first win at Bramall Lane was not lost on manager Nigel Adkins.
He said: "It's fantastic. For Scunthorpe United to beat anybody in the Championship is a great result.
"Now the momentum's with us and that's what we've talked about. We've tried to work on spirit all the way through.
"We've got some very talented football players at our club, young and hungry and we can score goals.
"The lads are having a right go together. The spirit is there for all to see."
Adkins refused to set his side a points target or reveal how many more wins would guarantee them another season in the Championship.
He added: "We're not looking at a points total. One thing is that 47 is not enough, so we've got to keep working very hard to keep the momentum we've got.
"The XI that go out to carry the flag into battle know they're fully supported by all the players. We've just to keep going and pushing on as much as possible."