Actually, both sides agree that they did not find the exact murder weapon. They found a knife "similar" to the type used to kill the victim which had Knox's DNA and DNA that was "similar" to that of Kerscher.
I don't think they found co-mingled blood, but rather Kercher's blood co-mingled with Knox's DNA. If two people live together, both of their DNA is going to be all over the place, so i don't find this surprising at all.
i'd agree there was a lot of physical evidence, but what that physical evidence proves (or doesn't prove) is highly debateable.