Works on my GeForce4 MX 420 as well. At about 5 fps.
When doing a fast movement, the 'blur' effect looks like a bunch of completely in-focus sprites at low opacity. If moving fast enough, the sprite with mouse movement can have gaps between the steps of the blur.
Is there a possibility of a proper motion blur with pixel shaders? I hear the best way to do it is using a velocity buffer for the pixels on the screen then blurring them with a pixel shader. I doubt the vertex shader approach would work properly for 2D games, but I'm no graphics programmer.