UI.Image Blur Shader with layering and masking support

UIBlur.shader

Shader "Custom/UIBlur"
{

    Properties
    {
        [Toggle(IS_BLUR_ALPHA_MASKED)] _IsAlphaMasked("Image Alpha Masks Blur", Float) = 1
        [Toggle(IS_SPRITE_VISIBLE)] _IsSpriteVisible("Show Image", Float) = 1

        // Internally enforced by MAX_RADIUS
        _Radius("Blur Radius", Range(0, 64)) = 1
        _OverlayColor("Blurred Overlay/Opacity", Color) = (0.5, 0.5, 0.5, 1)

        // see Stencil in UI/Default
        [HideInInspector][PerRendererData] _MainTex ("Sprite Texture", 2D) = "white" {}
        [HideInInspector]_StencilComp ("Stencil Comparison", Float) = 8
        [HideInInspector]_Stencil ("Stencil ID", Float) = 0
        [HideInInspector]_StencilOp ("Stencil Operation", Float) = 0
        [HideInInspector]_StencilWriteMask ("Stencil Write Mask", Float) = 255
        [HideInInspector]_StencilReadMask ("Stencil Read Mask", Float) = 255
        [HideInInspector]_ColorMask ("Color Mask", Float) = 15
        [HideInInspector]_UseUIAlphaClip ("Use Alpha Clip", Float) = 0
    }

    Category
    {
        Tags
        {
            "Queue" = "Transparent"
            "IgnoreProjector" = "True"
            "RenderType" = "Transparent"
            "PreviewType" = "Plane"
            "CanUseSpriteAtlas" = "True"
        }

        Stencil
        {
            Ref [_Stencil]
            Comp [_StencilComp]
            Pass [_StencilOp]
            ReadMask [_StencilReadMask]
            WriteMask [_StencilWriteMask]
        }

        Cull Off
        Lighting Off
        ZWrite Off
        ZTest [unity_GUIZTestMode]
        Blend SrcAlpha OneMinusSrcAlpha
        ColorMask [_ColorMask]

        SubShader
        {

            GrabPass
            {
                Tags
                { 
                    "LightMode" = "Always"
                    "Queue" = "Background"  
                }
            }

            Pass
            {
                Name "UIBlur_Y"
                Tags{ "LightMode" = "Always" }

            CGPROGRAM
                #pragma vertex vert
                #pragma fragment frag
                #pragma fragmentoption ARB_precision_hint_fastest
                #pragma multi_compile __ IS_BLUR_ALPHA_MASKED
                #pragma multi_compile __ IS_SPRITE_VISIBLE
                #pragma multi_compile __ UNITY_UI_ALPHACLIP

                #include "UIBlur_Shared.cginc"

                sampler2D _GrabTexture;
                float4 _GrabTexture_TexelSize;

                half4 frag(v2f IN) : COLOR
                {
                    half4 pixel_raw = tex2D(_MainTex, IN.uvmain);
                    return GetBlurInDir(IN, pixel_raw, _GrabTexture, _GrabTexture_TexelSize, 0, 1);
                }
            ENDCG
            }

            
            GrabPass
            {
                Tags
                { 
                    "LightMode" = "Always"
                    "Queue" = "Background"  
                }
            }
            Pass
            {
                Name "UIBlur_X"
                Tags{ "LightMode" = "Always" }


            CGPROGRAM
                #pragma vertex vert
                #pragma fragment frag
                #pragma fragmentoption ARB_precision_hint_fastest
                #pragma multi_compile __ IS_BLUR_ALPHA_MASKED
                #pragma multi_compile __ IS_SPRITE_VISIBLE
                #pragma multi_compile __ UNITY_UI_ALPHACLIP

                #include "UIBlur_Shared.cginc"


                sampler2D _GrabTexture;
                float4 _GrabTexture_TexelSize;

                half4 frag(v2f IN) : COLOR
                {
                    half4 pixel_raw = tex2D(_MainTex, IN.uvmain);

#if IS_SPRITE_VISIBLE
                    return layerBlend(
                            // Layer 0 : The blurred background
                            GetBlurInDir(IN, pixel_raw, _GrabTexture, _GrabTexture_TexelSize, 1, 0), 
                            // Layer 1 : The sprite itself
                            pixel_raw * IN.color
                        );
#else
                    return GetBlurInDir(IN, pixel_raw, _GrabTexture, _GrabTexture_TexelSize, 1, 0);
#endif
                }
            ENDCG
            }

        }
    }
    Fallback "UI/Default"
}

UIBlur_Shared.cginc

static const float MAX_RADIUS = 64;
static const float ITER_STEP = 2;

#include "UnityCG.cginc"
#include "UnityUI.cginc"

struct appdata_t
{
    float4 vertex : POSITION;
    float2 texcoord: TEXCOORD0;
    float4 color : COLOR;
};

struct v2f
{
    float4 vertex : POSITION;
    float4 uvgrab : TEXCOORD0;
    float4 worldpos : TEXCOORD1;
    float2 uvmain : TEXCOORD2;
    float4 color : COLOR;
};

sampler2D _MainTex;
float4 _MainTex_ST;

v2f vert(appdata_t v)
{
    v2f OUT;
    UNITY_SETUP_INSTANCE_ID(v);
    UNITY_INITIALIZE_VERTEX_OUTPUT_STEREO(OUT);
    OUT.worldpos = v.vertex;
    OUT.vertex = UnityObjectToClipPos(v.vertex);
#if UNITY_UV_STARTS_AT_TOP
    float scale = -1.0;
#else
    float scale = 1.0;
#endif
    OUT.uvgrab.xy = (float2(OUT.vertex.x, OUT.vertex.y*scale) + OUT.vertex.w) * 0.5;
    OUT.uvgrab.zw = OUT.vertex.zw;
    OUT.uvmain = TRANSFORM_TEX(v.texcoord, _MainTex);
    OUT.color = v.color;

    return OUT;
}

float4 _OverlayColor;
float _Radius;
float4 _ClipRect;

half4 layerBlend(half4 back, half4 front)
{
    half a0 = front.a;
    half a1 = back.a;
    half a01 = (1 - a0)*a1 + a0;

    return half4(
        ((1 - a0)*a1*back.r + a0*front.r) / a01,
        ((1 - a0)*a1*back.g + a0*front.g) / a01,
        ((1 - a0)*a1*back.b + a0*front.b) / a01,
        a01);
}

// Like Photoshop, see http://www.deepskycolors.com/archive/2010/04/21/formulas-for-Photoshop-blending-modes.html
#define BLEND_OVERLAY(a, b) b <= 0.5 ? (2*b)*a : (1 - (1-2*(b-0.5)) * (1-a)) 
half3 overlayBlend(half3 back, half3 front)
{
    return
        half3(
            BLEND_OVERLAY(back.r, front.r),
            BLEND_OVERLAY(back.g, front.g),
            BLEND_OVERLAY(back.b, front.b)
        );
}

half4 GrabPixel(sampler2D tex, float4 uv)
{
    half4 pixel = tex2Dproj(tex, UNITY_PROJ_COORD(uv));
    return half4(pixel.rgb, 1);
}

half4 GrabPixelXY(sampler2D tex, float4 uv, float4 size, half kernelx, half kernely)
{
    half4 pixel = tex2Dproj(
        tex,
        UNITY_PROJ_COORD(
            float4(
                uv.x + size.x * kernelx,
                uv.y + size.y * kernely,
                uv.z,
                uv.w)
        )
    );
    return half4(pixel.rgb, 1);
}

half4 GetBlurInDir(v2f IN, half4 pixel, sampler2D tex, float4 size, half dirx, half diry)
{
#ifdef UNITY_COLORSPACE_GAMMA
    float4 color = _OverlayColor;
#else
    float4 color = float4(LinearToGammaSpace(_OverlayColor.rgb), _OverlayColor.a);
#endif

#if IS_BLUR_ALPHA_MASKED
    float visibility = color.a*pixel.a;
#else
    float visibility = color.a;
#endif

    float radius = clamp(_Radius, 0, MAX_RADIUS);
    visibility *= UnityGet2DClipping(IN.worldpos.xy, _ClipRect);

    float4 sum = GrabPixel(tex, IN.uvgrab);

    half steps = 1;
    for (half range = ITER_STEP; range <= radius; range += ITER_STEP)
    {
        sum += GrabPixelXY(tex, IN.uvgrab, size, range*dirx, range*diry);
        sum += GrabPixelXY(tex, IN.uvgrab, size, -range*dirx, -range*diry);
        steps += 2;
    }

    half4 result = sum/steps;
    return half4(overlayBlend(result.rgb, color.rgb), result.a*visibility);
}

Great, it works on World Space canvas as well, thanks a lot!