When using the NR1 noise reduction option, there is a sort of picture blur that comes along with it. Is this just in the viewfinder or is it actually recorded to tape like this?

Depending on the amount applied, NR can soften the image. Believe theer are past threads on this general subject and a search should be be productive.

In any case, suggest you run tests using the type of viewing intended for the final project to determine if the NR artifacts are acceptable to you and your application.

Thanks for the input Don. Unfortunately I wont have time to do much testing prior to a shoot that I have scheduled for tomorrow. NR2 does not have the issue, only NR1. I have had the camera for several years and I have always assumed that 12 & 18 db is unusable.(I normally shoot in a studio setting with this camera). After playing around with the NR features it appears that 12db is indeed usable in certain settings as long as the NR feature is on and your not filming all dark colors.

FWIW: Some folks use presets with adjustment to black and coring to help manage noise in the shadows.