This might not be applicable to your issue, but I have just begun a new project myself with most of my elements being imported .avi files from a build in After Effects. I was having performance issues, and it was suggested to me to export all my files to their native size and not in a 1920x1080 preset. My scenes went from lagging and capping past 130% to spiking at 45% at the highest.
Maybe see if there are any optimizations that you can do to save on resources.
As for the blur effect, I have no clue. Depending on how you have your project set up though, you might be able to export that shape or layer through After Effects. Add your bells and whistles there, so Xpression isn't doing any real-time graphics rendering each time it needs to be played back. Personally, I've never done any effects in Xpression yet. But, I'm still incredibly new to the software.
-JJ
#XPression