Does the site already exist in Wordpress?
So there is no need for a new installation, it is possible to just create a new website/blog page and call the posts. Why couldn’t you stylize? Of course you should marry the rest of the site, but you can style whatever you want on a single page through css.
Anyway there is no problem also if you prefer to do a new installation in subfolder. I just think a new configuration and hosting space is unnecessary.
There is no rule regarding the folder or Domain blog.
If you prefer Domain can opt for a new installation as well or use the Multisite function that possibly make your life easier, as it would have access to the same settings and at the same time give freedom to use theme independent and other functions.
At the SEO level it would be slightly better to use the blog in folder instead of subdomain because it facilitates linkjuice logic.