To make distance blur (which is actually due to the limitations of a camera's depth-of-field, when you think of it, eyes don't really have this problem, except really close for us with bifocals) work you need something to seperate the distant parts from the close ones, either manually or using a 3D program like Bryce wich can render an image in grayscale to distances, (or maybe it does it as an alpha channel, I forget). Once you have the information you can do some kind of variable selection (like select, load selection if it was in a alpha channel from Bryce) to have the distant parts fully selected, the close ones less selected, and put a Gaussian blur on the picture - the result would be distant parts would be blured more. Anyway, the hard part is getting the variable selection, there is no way for a plug-in to do that automatically..