Agreed. It's like the dilating pupiles after an adrenalie rush (?).
In-game is quite different as isn't that "I forget my glasses" type of blur, more like "I've been hit by a hammer in the head". :P
And don't eat so much FPS.
If is annoying it shouldn't be optional cause everyone would disable it to have a little edge (at least in MP). I know its more realistic then muffled sounds but if you are planning to play a long session, it could cause real headaches.
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Check this, it covers everything I just wrote (should have posted it early): http://www.youtube.com/watch?v=_RZJfVGVeME
Also, this guy has DoF enabled wich causes some blur in objects.
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then slowly fade in the battle sound again.

