What I would do is take the image into PSP, select the area I want to blur, contract and feather it, copy and paste as a new layer, and then use gausian blur on what you just copied. It should blend in nicely with the picture at the bottom.

"It is good to see ourselves as others see us. Try as we may, we are never
able to know ourselves fully as we are, especially the evil side of us.
This we can do only if we are not angry with our critics but will take in good
heart whatever they might have to say." - Ghandi