Since you have KWGT, I don't think this isn't possible (someone correct me if I'm dumb and forgot something). However I can think of three ways you can get it done:

1. Blur the background manually in a third party Photo editor. You can select the Blur amount to your liking but will have to do this to all the wallpapers you use.
2. Get a launcher that has the option to blur the background natively. The blur is often non adjustable, so you may or may not like it. (Sorry, I don't have a list of launchers that have the feature, but they do exist.)
3. Get KLWP. You can select the Blur amount to your linking and get other features that KWGT doesn't have; however you'll have to pay again.