Just as the title says.
It works as intented but it is not what you are thinking cause I am stupid with naming…
Basicallly the blur here is only meant to help chosing which lod to display. For instance if you use a skybox with a .env you can use this property to simulate a PBR roughness. Here you mirror does not have mips so no lod and anyway they would look ugly and blocky.
If you want to blur a mirror, use the blur kernel property at the mirror level https://www.babylonjs-playground.com/#G3HSAW#36