Not quite sure why me saying that your solution doesn’t work == me having a bad day…
On topic: you say “this probably renders out after the post processing” so I recreated what you did again and it didn’t work. See material here:
And after using it as the brush material in a UI widget I get the following when I use a distortion effect in proximity to the 3D widget component:
In the video you can see I’ve set the Blend mode to “Transparent” as you state.
And the UI is distorted, meaning the solution does not work. That’s all.