Hi,
Psychtoolbox is an open community that interfaces between MATLAB and the computer hardware. "Screen" is a function of that toolbox. Yes, you cannot apply Gaussian blur on shapes made by "Screen" function, as Gaussian blur is available for images. For blurring the edges you can use a subfunction "DrawTexture" of Screen command in Psychtoolbox with the proper arguments that can help in blurring.
As you also have used that subfunction in your code. I think changing the "FilterMode" argument of that subfunction will help in blurring the edges. FilterMode value will help in drawing the blurred textures.
You can also refer to the following documentation for more information:
Hope this helps!