modification for firing blanks?

Various ways, depending on when & where. Restrictors could be inserted into the barrels which allowed cycling and muzzle flashes. Some of these were more professional than others; I've heard of various screws and other similar stuff being jammed in....but mostly they are designed for the purpose.
I recall once reading an advertisement for Thompson SMG barrels which were actually made only for use with blanks and would be totally unusable with live ammo.
There are dedicated blank firing guns as well. They only use a 8mm. or similar size blank and cannot chamber real ammo.
And most recently, in film, the use of airsoft or dummy guns and C.G.I. for muzzle flash and case ejection.

A good friend of mine was an airborn reenactor. He had two M1 garands with removable blank adapters. His had the muzzles threaded internally and the blank adapter was screwed into the end like a pipe plug. The blank adapter had a small hole drilled in the center to allow the gas to escape but provide enough back pressure to cycle the action. He still has one of them and we shoot it from time to time with real ammo and the blank adapter removed. Surprisingly the accuracy is still excellent even with the internally threaded muzzle.

He told me sadly a number of reenactors have been killed over the years when loose blank adapters come loose and become projectiles. He told me some of the older reenactment guns used to shoot wood bullets with a cross shaped attachment at the muzzle to fragment the wood bullet. These were found to be extremely dangerous.

Tommygunn said:

And most recently, in film, the use of airsoft or dummy guns and C.G.I. for muzzle flash and case ejection.

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Pfff don't remind me. I wonder if I'll ever stop cringing when I see guns firing full auto with absolutely no muzzle lift whatsoever...

Or repeated one handed, 50 yard headshots from revolvers with 19 round capacity. Talk about suspension of disbelief. It makes cocking the hammer of a glock not bother me so much.

To answer your questions (the best I can that is):

A) It depends on the firearm - gas operated guns require nothing more than a barrel restriction (blank firing adapter) threaded internally into the muzzle end of the barrel. Sometimes slight alteration to the feeding mechanism is required to reliably feed blanks. Recoil operated breech locked guns are a whole different world - in a nutshell, you have to make it a blowback. In the case of short recoil Browning style gun - M2 .50 BMG machine gun, M1919 MG and etc. you have to make some sort of a "booster" to push the barrel back - either a two piece barrel, or a restriction at the muzzle end of the barrel sleeve (M1919 for example). Bolt action rifles do not require an alteration, except tuning the feed mechanism if needed.

B) It's best to avoid putting some sort of restrictions too close to the chamber for couple of reasons - one is that some blank cartridges closely replicate live ammo OAL for reliable feeding. And two is that, especially on semi-auto and full-auto guns, the hot gasses from firing are acting as a sort of plasma cutter. It does not take many rounds to cut that restriction off, or pieces of it, and send them flying thru the barrel. Depending on the steel used for blank firing adapters, for a full-auto gun there is about 500-1000 rounds life span of that adapter. After that they are so worn out and the opening gets enlarged enough, that it fails to generate the needed pressures.

About mixing live ammo with blank one - they do differ enough for one to notice. If one is stupid enough to fire a live ammo thru a blank converted gun (with a blank adapter) nothing less than a spectacular Ka-Boom is expected. Reanactors must be properly instructed and the kind of people that take responsibility for their actions. And at end, there must be an armorer, or a bunch of them, that look closely for that sort of stuff.

I used to do WW2 (and WW1) reenactments, back in the late 1980's. Most of us did not want to permanently modify our weapons to fire blanks. For the M1 Garand, we used an external blank firing adapter which replaced the gas cylinder lock (threaded on the barrel) and was secured by the lock screw. (The BFA is a cylinder with a small hole, so as to provide enough back pressure to cycle the weapon.) I had one incident where my BFA blew off and was found on the ground 5-6 feet in front of the muzzle. I'm not sure how that happened. That underlines the importance of always pointing the gun in a safe direction, even when firing blanks. Reenactors are supposed to never aim directly at the "enemy."

I also adapted my water cooled and air cooled Browning machine guns to fire blanks. Besides the issue BFA's, this involved using shortened recoil springs, and feedway blocks so that the shorter blank rounds would feed reliably. One characteristic of firing blanks in machine guns is that the barrels heat up much faster than when firing live rounds. You have to fire short bursts and allow for cooling in between. Since the Brownings fire from a closed bolt, there's a real danger of a cookoff if the barrel becomes overheated. I found myself having to manually clear the chamber every so often, and hold back the bolt, to allow cooling. (I didn't bother filling the water jacket with water, for the water cooled gun. Maybe I should have.)

Bolt action rifles did not need any special adapting to fire blanks. For my M1911 pistol, I just cycled the action by hand.

I have seen a few of the non-firearms used in lieu of adapting a real gun to fire blanks. I know a guy who reenacts as one of the Other Side. He has a Volkswagen Thing made up to look like a Kubelwagen and mounting a fake MG42 that runs on propane. The hose to the propane tank is covered to look like an ammo belt at first glance. He has a blank-only MP40 copy for dismounted action. Add in the period style German uniform and he has a substantial investment in his hobby. And that is just for one war, he does others.

Every one of 'em requires a different BFA. Making an M1 Rifle or Carbine a blank firer only also destroys any collector or shooter value. Plus some pistols like 1911/1911A1's require the locking lugs on the barrel be removed. Bolt action rifles and revolvers require nothing to make 'em work.
"...mixing live ammo with blank one..." There shouldn't be any live ammo anywhere near a re-enactment. Ever.
"...not sure how that happened..." BFA's are known for doing that. CF required the troopies to put gun tape(green duct tape) on 'em.
"...Volkswagen Thing..." Pretty much was a Kubelwagen. Slightly different hood angle though.

1911 guy said:

Due to a ramrod being launched, a rule was made that allowed only one shot per person, as ramrods had to be left at the rear.

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I don't understand this. When I was doing Civil War reenacting, there was no problem reloading using paper cartridges (no bullets) simply by pouring the loose powder down the barrel. You don't need a ramrod to load blanks. Some events did not allow ramrods on the field, and some did, but it was clearly understood that you were not to use them. The dangerous thing about using ramrods was not so much shooting the whole ramrod, but having the tip break off and shooting that.

Be aware that shooting a "blank" intended for launching rifle grenades in a weapon with a blank firing device installed intended for report "blanks" can be almost as bad as shooting live ammo through the same.

Not all "blanks" are created equal.

Bwana John said:

Be aware that shooting a "blank" intended for launching rifle grenades in a weapon with a blank firing device installed intended for report "blanks" can be almost as bad as shooting live ammo through the same.

Not all "blanks" are created equal.

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That would certainly seem reasonable; look what the grenade launcher blank was intended to do!
Grenades ARE a tad larger than bullets........

Bwana John said:

Be aware that shooting a "blank" intended for launching rifle grenades in a weapon with a blank firing device installed intended for report "blanks" can be almost as bad as shooting live ammo through the same.

Not all "blanks" are created equal.

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Grenade-launching blanks (at least in U.S. service) can be identified by a star crimp, while regular GI blanks have an annular crimp. Don't ever try to use the propellant for any other purpose, such as loading it behind a bullet. That's a good way to blow up your gun.