Are you referring to something other that the default cross-fade where if you enable and then drag one event over another it fades into the event over time depending on the amount of overlap?
Motion blur is available, but doesn't sound like what you're after.
Motion blur detects what's moving in the frame and adds a blurred "trail", to accentuate the moving effect - very impressive with moving graphics and special effects for moving people etc..
To achieve what you describe, apply gaussian blur, but keyframe it so it only comes in for, say the last second of the shot. Do the ooposite with the next event - start with blur but keyframe it out to nothing after say a second.
Now, if you overlap the two shots by just under a second, the first shot will go blurred, cross fade to the second blur, then clear back to normal.