The easy way: In Reactor, there is an EdgeBlur macro. Give it the composite in the main yellow input and the alpha for your photo in the green input. Then adjust the controls to taste.
The slightly more complex, but more rewarding way (this is exactly what's in the macro): Use a Filter node in Sobel mode to find the edges of the alpha. Use an ErodeDilate and a Blur to adjust the width and softness of the matte it creates. This matte is used as a mask on a Blur of the composite.