1. Duplicate the clip immediately below itself.
2. Apply pixellation / blur - whatever effect you want to the top track.
3. Apply Cookie Cutter (Cut away all but Section) to the top track and isolate the part you want.

Choose the best shape - oval is good for faces, and size and position it through the clip using keyframes.

Alternative is to apply the effect to bottom track, then set the cookie cutter to top track and invert it ("Cut away Section") so it creates a hole through which the blur shows through.

Use feather to blend the two seamlessly.