Yes, it looks like masking out the airplane and applying a blur tool to the background in post process. Reshade has some effects that can do that live in-game, but it requires z sorting information that our old game engine simply does not provide in the proper format to be used.
Yes, that's what it seems like to me. Wasn't there, at some point, a thread that was created as a place for that sort of 'artistic embellishment'? I'm being lazy, but didn't see it right off.
To me, it would seem a bit misleading if someone wound up with the impression the sim can do that "out of the box".