Well when you use StretchBlt its like taking everyother pixel and using that, however this means if you use it on a grid and the lines on the grid are 1 think (and lie on the every other line) they will be lost or the other way round and they will appear as a solid color.
When you use the Blur first this means that a pixel on the missed out lines isn't forgotten because it has had an effect on the surrounding pixels.

There is a slight delay but it all depends on how big the picture is and what method you use. Some methods you wont even notice the delay.