All perfect praise be to Allah, The Lord of the Worlds. I testify that there is none worthy of worship except Allah, and that Muhammad is His slave and Messenger.
The Hadeeth mentioned in the question is authentically attributed to the Prophet and was cited by At-Tirmithi, Ahmad, and others. We have previously underlined that this Hadeeth indicates the permissibility of Tawassul (seeking intercession) by virtue of the supplication of the Prophet during his life. However, scholars held different opinions regarding the permissibility of Tawassul by virtue of his supplication after his death. The adopted opinion at Islamweb is that it is impermissible.
You asked, “Was the blind man in the presence of the Prophet addressing him directly?” The wording of the Hadeeth suggests that the man recited the supplication in the absence of the Prophet, because he recited it during the prayer. This wording does not indicate the permissibility of Tawassul by virtue of the Prophet after his death because this man went to him before reciting the supplication and asked him to supplicate Allah for him, and he then sought Tawassul by virtue of his supplication. He, interceded for this blind man and then commanded him to ask Allah, The Exalted, to accept his intercession for him, and this is not possible after his death. For more benefit, please refer to Fatwa 142097.
For more benefit on Tawassul by Virtue of the Prophet, please refer to Fataawa 4413, 4416, ">81681, and 264595.
Allah Knows best.