a) take original image and duplicate
b) blur the duplicate
c) create a radial gradient, same size as the image
d) use that gradient as a mask on the blurred image so the center is sharp and the edges is blurred
e) last composite the original, blurred and another image one ontop of the other to achieve the final effect
But, I have to believe that there's a much simpler, possibly faster way to do this.
Here's an original image:
And this is the final result I want:
