With the background you can use depth of field on your camera to avoid the requirement to blur in Gimp.
As far as creating a crowd there are a few different methods of doing this (ranked in order of preference). The main goal of each method is to keep the scene complexity down to a point where it can be fully loaded into you video card VRAM.
1) Scene Optimisation:
Reduce the complexity of the background characters by using scene optimizer. I would suggest reducing the texture map sizes by a factor of 4 and also removing all bump / normal maps. You will also likely need to reduce the texture map sizes on your foreground characters as well. However on these scale down by a factor of 2 and potentially keep the bump / normal maps.
2) Rendering in Layers:
Create the full scene with all of the characters and then render in several layers. Firstly remove most / all of the characters and render the background. Then switch off everything except for the background characters and render that separately (as png). The do the same for the foreground characters. It is the just a matter of recombining the layers in GIMP.
3) Cardboard Cutouts:
Create renders of each of the background characters and then create a billboard of them by using a primitive plane with the rendered image and also using the outline with cutout opacity. There are also asset packs for crowds (just search as billboards).