Preferably something in paint, or some other built in tool, and definitely free. Does not need to be fancy, just what amounts to smudging the text in an image.
GIMP (which is viewed by many as a replacement for Adobe's Photoshop) can do this, or if you need to automate this you could use ImageMagick (which, in addition to its assortment of excellent command-line tools, is supported by a variety of diverse and powerful languages such as Perl).
GIMP (GNU Image Manipulation Program; free and open source)
GIMP tutorial on how to do blurring
Image Magick (free and open source)
Image Magick instructions for blurring