There is no way of masking the Background Blur widget. One of the issues on even trying to make something to substitute it is that the material domain UI does not allow you to access the screen info (pixels data) since the renderer is already done at that step and it only needs to add the slate on top of the frame.
Which are the possibilities from here?
- dig into the engine source and create a version of the widget that accepts a mask like a sphere to cut the shape you want with a certain radius
- create a post process material with gaussian blur node (custom node with HLSL) and apply the blur at the screen coordinates occupied by your widget. The position must be taken from the widget info.
Besides those 2 above I can’t think of anything else, since all attempts failed.