Normal map's literally don't see anything @ 90 degree's (and over) as it's perpendicular to the surface. Here's a very basic example of what's happening, the baker see's what's on the left side while the geometry is on the right.
Firstly you can't blend AO into a normal map, unless you're just trying to visualize the difference? Secondly, a baker can pick up 90 degree angles. I use 90 degree angles constantly without issue. For example, the UV islands on this mesh are only split by smoothing group changes: Despite having many 90 degree changes…