A few thoughts:
1. One has to be careful to distinguish (a) the production of the actual thumbnail from (b) post processing work done on the full rez file followed by (a).
Specifically, if you don't want the prospective customer / viewer to be disappointed because the thumbnail and full-rez versions look different, all post processing work is typically done on the full-rez file, and then, step (a), above, consists of nothing more than down-rez'ing + sharpening at the new resolution. One certainly isn't going to use labor intensive manual smudging and blurring techniques in preparation of a thumbnail if it isn't going to also be seen (ie, used) at full rez.
2. I don't know of any pro photographer who lavishes individual care on each thumbnail, especially if they are as small as the one you posted (ie, 200 px horizontally). Other than nerdy pixel peepers (ie, like most of us involved in this thread, including me), members of the general public (and even photo editors) just don't look at small thumbnails very carefully. They simply want to get a general overall idea about the image, and if they are interested, they will click through to either a higher resolution preview, or to the full-rez (watermarked) file.
In addition, other than fine art photographers and web designers who do work on very small number of images, most working pros who need thumbnails are typically working on groups of images that can easily number in the hundreds, if not thousands. This includes wedding pros, photojournalists, sports shooters, corporate and other event photographers, etc. This is another reason not to get all wound up about ultra high quality small thumbnails.
3. Most pros can get all the quality (and speed) they need for thumbnail production out of a program like Lightroom (or Bridge + the ACR component of PS).
For example, attached is the result of about 2 minutes of fiddling with sliders in ACR, and then using PS only to down rez the resulting image and do final sharpening. No smudging, no masking, nothing but global operations were performed on the image.
For reference, immediately below it is a copy of the thumbnail that the OP liked.
HTH,
Tom