For the title question, "is 'blitzkrieg' understood by the average native speaker?", there are several ways to address this. One can rely on the introspection and experience of language experts (not just lexicographers but secondary school teachers and professional writers). My expectation of what they would say is that 'blitzkrieg' is most widely known as a historical term learned when studying WWII in high school (in both US and UK). In that, students are universally exposed to the word. However, many vocabulary items that one is exposed to are often lost without repetition. I'd guess that most college educated Americans would vaguely recognize it as something maybe having to do with WWII and maybe speed. The word 'blitz' is more well known (a football term for a fast attack); 'krieg' is not a recognizable word by itself, so the mental state upon hearing 'blitzkrieg' gets most of its feeling from 'blitz'.
But that is a qualitative explanation which only depends on your trust of my assessment.
A more quantitative result can be extracted from frequency counts of the appearance of the word. One can take frequency as a proxy for population understanding. If a word appears frequently, one can infer that more writers expect that the reader will understand it. Of course there are no guarantees and one is relying on are large number of instances of all words and of the target word to be sure.
Google NGrams is one source of frequency data.
Google NGrams gives a big spike during WWII (0.0000500%) but then falls pretty quickly to bouncing around a third of the frequency all the way up to now. This rough frequency (0.0000150%) falls around the OED's Band 5 or 4 similar in frequency to words like 'galvanize', 'surreptitiously', 'Jungian', 'egregious', 'sequester'. It's not a perfect measure but it is in the ballpark.
Note that any corpus may have difficulties and Google NGram's are well known. But the data is trustworthy enough to say something vague like 'most people with a college education, with context, would understand what is meant, but not necessarily remember the history behind it'.
As to whether the word can be used figuratively and be understood, sure but it all depends on the construction of the sentence and context. For example 'scrum' is a well known word in software but the general American public unfamiliar with rugby may not get it at all.
Blitzkrieg approach for gettings things code.
is not a full natural English sentence so it by itself may be puzzling to a native speaker for many reasons and so it would be hard to gauge if the first word is the cause of that or something else. A more natural composition using those same elements would be:
We're using a blitzkrieg approach for coding things up.
Note also that I've been using the uncapitalized version 'blitzkrieg'. In German, a noun is always capitalized 'Blitzkrieg' but that is not the case in English orthography. In any case, the NGrams are almost the same shape for both.