is the versioning limitation of 1 year is enough?
Yes. If you include your LrC Catalog backups in the set of folders going to BackBlaze, it will keep the back up of those catalog backups forever. This is a bit weird to think about but the BB "versioning" means that you can go back to the state of the file as it was up to 1 year ago. It doesn't mean the files older than than that go away just that you can't see what they looked like more than a year ago. But, as the LrC catalog backups should never change what they looked like 10 years ago is the same as what they looked like 1 year ago - so no problem.
is the additional cost of Backblaze is justified?
I think it is but it all depends on your finanancial situation. Unlimited data for under $100/yr. Worth it's weight in gold. What is that now - a dozen eggs?
Really - what is your time worth to have to redo everything you've ever done in LrC if a disaster hits? Even if you never recover anything from BB for 10 years then you're house burns to the ground. What is $1000 for 10 years of BB compared to lossing a lifetime of photogaphs of your family?
Backbalze does not backup application folder, my catalog is on default location C:\user\pictures, LrC Set Up is on default location C:\user\AppData\Romming\Adobe & Data is on disk D - can the software take care on those deferent locations?
By default BB grabs everything specific to you on your computer. It does not grab stuff that comes with applications which you could just go to the venders website and re-download. So, for example, it does not copy the LrC application code. It does copy everything under your user ID from your boot drive. C:\userid\pictures is copied. You may need to tell BB to include disk "D" and if your images are on some other drive you should tell it to backup that drive as well. There is no need to tell it to back up your local backup drvie. I have BB backing up my C, P, and S drives
which of the 2-backup software fit better for this purpose?
Both about the same. work essentailly the same way but some different features.
BackBlaze will overnight FedEx you a disk drive of up to 8tb containing your data as of a specific date to use for recovering a failed or lost disk drive. They charge $280 for this service but if you return the drive to them within 30 days (free shipping both ways) they refund the full amount. Downloading your data over the internet is free.
Crash plan used to ship you a disk for initial data loading if desired (rather than weeks of uploading through the Internet but they don't seem to do that anymore. But CP offeres unlimited versioning rather then the 1 year BB limits it so.
I'm sure there are other differences as well.
Both have unlimited data plans. Both have good customer service.
Hope that helps