You must pre-compose the foreground with the background. That's how it works in a real camera, too.
Actually I put the balls with sky together into a comp. Or conuld you please check my attached file if it's correct or not?
I checked out your file (in CS4 and CS5) and can't explain the rendering errors in Lens Blur. If you apply a Compound Blur using the same elements, the blur appears consistent over the appropriate edges.
I suspect this is a genuine bug with Lens Blur's ability to use depth maps. Please post a bug report.
I think you are right. I tried to apply the Lenscare filter in my file and everything was fine! I will report it as bug to Adobe. Anyway, thanks for your reply!
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Actually that is a limitation/ design flaw in the effect that has bene there ever since it came into existance. It applies the depth buffer a second time as a transparency mask. That's one of the reasons why most users use Lenscare, which indeed is still the best DOF plug-in available...
Yes, Lenscare is a must-have. Another reason not to use Lens Blur: using it anywhere in your comp turns off multiprocessing for the entire render.