is the movement supposed to be so loose on the Sanwa joysticks
Joystick feel is relative but yeah the Sanwa sticks are a lot "lighter" than Happ stuff. you can order heavier springs for the Sanwas I did on mine and it definitely improved the feel for me. You can also get oversized actuators to shorten the throw and other modifications:
https://www.focusattack.com/controls/joysticks/joystick-accessories/performance-mods/
I also want to do a Naomi in here to if it's possible at least until I can get another cab
NAOMI with a Net-Boot setup is a phenominal system with tons of great games. it is a JVS board as opposed to JAMMA so wiring it up isn't as straight forward.
Considering you're going CPS2, getting yourself a Capcom I/O board for the NAOMI would be best as that would allow you to plug right into the JAMMA harness and CPS2 connector. I believe the harness you've got in your blast has the necessary JVS Power connectors on it too, which you'll need.
You can route the Audio through the JAMMA harness but you'll likely get better sound if you plug in to the RCA stereo connectors directly and use the Blast's on-board stereo amp.
Another option would be the Sega JVS to JAMMA I/O this would also allow you to plug into the JAMMA harness but the kick connector would be different. These tend to be a lot cheaper than the Capcom I/Os though.
The final option would be to get a JVS harness for your cab and a Sega Type 1 or type 3 JVS I/O or similar... This is how they would have wired the cab in an arcade environemnt for NAOMI but you'll have to swap out the harness every time you switch back to JAMMA so it's not really ideal IMO. If you were going to use mostly JVS system like NAOMI, System 256 and Type X, then this would be a good option, but where you're going to have mostly JAMMA then something like the Capcom I/O will be ideal.