Transformers

There are a few different methods of blending.
One of mine are, do the Gausian blur thing like Ali said
But on your duplicated layer take a soft brush out
and set the Opacity and flow of the brush to about 40-30
Than erase around the edges, Just to get the hard lines out
that way you don't have to compromise the whole render image.
Than just mess around with the mode you like
I'll usually lower the opacity of the duplicated render a bit to..
depends on the render or the type of sig I'm doing.