I am interested to know how geometry changed and faces were added when removing material in a different area....notice the extra blend face after the first machining? That shouldn't happen unless we're looking at 2 different models at some point, should it????
Use 2 Edge Blends and Stop Short as previously suggested then start building transitional surfaces with Bridge Curves, Project Curve and Through Curve Mesh. Sew the transition surfaces and then use Patch and call it a day. If that doesn't do it for you, good luck figuring out what the Variable Radius values need to be for an Edge or Face blend to go in there.
The non-tangent condition (solid line in the blend surfaces) on the right of the island as you termed it, will lead to an unsmooth transition 100% of the time....needs a small blend in there to correct it but since we're dealing with a Gordian knot type of model, I left it as-is.
I added that face only to make the next step faster.
I'm interested in showing how the machining part is made.
You can model the part in at least two ways depending on how it will be done.
The first one is what I have shown and concerns a machining part.
The second, for example, if it is a molded part I agree with you @TimF that those blends can be made in many ways, as suggested, i.e. Variational Sweep, Through Curve Mesh and so on.
It's not perfect by any means - there are a couple of areas that could be done better. The workflow / technique was what I was striving to show more than anything, and even that can be improved upon in other ways.
Attached is what I would have done, if a slight change would be allowed to the original geometry. The main difference with this is the edge blend around the cavity is created prior to the "island", allowing that edge blend to roll behind the island like it wants to do naturally - the island cuts off that path and that's why the original model is so difficult to blend. After that, extrude the island, blend around it, blend the 2 R9s together and then throw the R2 on top of the "island". The only real change should be that there are a couple of remnant surfaces of the R9 going around the cavity which are above the R2 on top of the "island".