It seems like there should be a middle ground where you blur enough to remove SDE but not enough so that pixels overlap. The whole problem with SDE is that there is a perceptible gap between pixels - blur will spread the pixel over the gap but the gap is what ensures that the pixels do not become blurred ontop of each other. I assume this doesn't work in practice (since I don't think anyone is doing it), so I'd be interested in an argument for why it doesn't.

Conceivably, a higher resolution display would have a worse SDE than a lower one. If the pixels became smaller, then the gaps between pixels could get worse even if there are more pixels per inch. For example, [1] shows a game of Tetris played on a building and the problem with it is not that the resolution is low, but that the pixels have too gaps between them. Doubling the resolution would only help a little but make each pixel a big square instead of a dot would help immensely. A diffusive screen over that building could help potentially quite a lot. This is obviously an absurdly exaggerated scenario.

[1] https://mashable.com/2014/04/06/building-tetris-philadelphia...