I didn't know anyone was still working on BladeEnc. (Actually, it looks like no one is; it hasn't been updated in about a year.) It has, in the general populace, been deprecated in favor of LAME for well over a year now. I cannot speak to it's gapless encoding capability, as I never even realized it had one, and I haven't used it in probably two or three years (it seems that long, anyway). But, with the possible exception of the quality of the gaplessness (which, again, I cannot speak about), I think you'll find that LAME is a better encoder. Many people think it is just as good or better than the Fraunhofer encoder. YMMV.

(But, to actually answer your question, yes, it can do VBR. It can also do CBR and ABR.)