The effect you want is very similar to what I did on the thumbnails in my Arcadeflow theme (and actually the mockup you are linking was the main inspiration for Arcadeflow
). I don't suggest you look into my code because it's a mess
What you need to do is use GLSL shaders. You can use gauss blur shaders to generate the blurred background, then you can overlay your snapshot on top and apply to that another GLSL shader that will tweak transparency so that it fades along the Y axis. Doing this require some trick with nested surfaces because GLSL gaussian bulr is a two-pass filter.
I'd love to have the time to prepare a simple mock up but I'm not sure I'll be able to do it.