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I'm perplexed on how to vote here - I think the technique is pretty cool, but blurring on entry is surely not a good thing for good user interface design. When working with user interfaces, it is critical to make proper "affordances" (see The Design of Everyday Things - affordances hint at how something should be used intuitively) - blurring the sibling menu options on entry may very well be the antithesis of an affordance.

So for technology - you get an A+. For user interface, an F. I have to vote this one down.