re: redshifted it looks like a blob
Well, it's definitely too big to be a supernova explosion, so I'll stick to it being a galaxy. Maybe even being two galaxies coliding (gasp!).
Again, I hope we'll find the answer soon.
If you watch NASA TV, you'll hear a recent broadcast from Hubble's Mike Kienlen, deputy project manager, Hubble Space Telescope, Goddard, stating against speculation. He certainly did not forsee what has been seen and known since Hubble began it's servicing mission from the start.