The blurred images would convey the concept and the concept in many cases would be psychologically damaging, as you say. However I strongly suspect that the vivid details would only compound that damage. Progressive unblurring wouldn't prevent psychological damage, but surely it should help alleviate it to some degree.
It may even be possible to selectively blur only parts of images for some classes of content. For instance, a filter that blurs portions of the image that are vivid red. If the red blur is on a dinner plate, then it's probably just a plate of pasta with tomato sauce. If the red blur is where somebody's head should be, that's probably gore and witnessing even that could be disturbing. But I know I'd rather see the blurred version.
It may even be possible to selectively blur only parts of images for some classes of content. For instance, a filter that blurs portions of the image that are vivid red. If the red blur is on a dinner plate, then it's probably just a plate of pasta with tomato sauce. If the red blur is where somebody's head should be, that's probably gore and witnessing even that could be disturbing. But I know I'd rather see the blurred version.