Why are there so many out of focus shots?

It's to recreate the look of photographs from the era. Many of them had that ghostly quality. The edges of them Blurred or Stretched from the type of Camera used(I forget what they're called.) Add in how the film is played out in many scenes like a reverie with a dream like feel... It's Magical IMO.

Dominik looked at a ton of period photos from that era and with the legendary Roger Deakins at hand, they recreated that look on film. A certain aspect ratio combined with lighting, framing, zooms etc and some post production enhancements got the look they wanted. I'm sure someone on this board knows the exact process and will get back to you. Look it up online, I read an article with Deakins explaining it all. Could be on one of the ASC Websites or something of the sort.

@ kmags84

And despite all that it wasn't even nominated for best cinematography.

To the above poster.....yeah it was. It lost to There Will Be Blood, but it was indeed nominated.

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A number of shots in Jesse James have a sort of dreamlike vignetting at the edges of the frame. How did you achieve that effect?

Deakins: That was done entirely in camera with lenses that are now called ‘Deakinizers.’ I used to use this gag where I put a small lens element in front of a 50mm to get a similar effect. I went to Otto Nemenz and asked how we could create that effect in a better way, with more flexibility and lens length. The lens technician suggested taking the front element off a 9.8 Kinoptic, and also mounting the glass from old wide-angle lenses to the front of a couple of Arri Macros. Otto now rents out three Deakinizers. Removing the front element makes the lens faster, and it also gives you this wonderful vignetting and slight color diffraction around the edges. We used different lenses, so some were more extreme or slightly longer than others. Sometimes we used [Kardan] Shift & Tilt lenses to get a similar effect.

Most of those shots were used for transitional moments, and the idea was to create the feeling of an old-time camera. We weren’t trying to be nostalgic, but we wanted those shots to be evocative. The idea sprang from an old photograph Andrew liked, and we did a lot of tests to mimic the look of the photo. Andrew had a whole lot of photographic references for the look of the movie, mainly the work of still photographers, but also images clipped from magazines, stills from Days of Heaven, and even Polaroids taken on location that looked interesting or unusual. He hung all of them up in the long corridor of the production office. That was a wonderful idea, because every day we’d all pass by [images] that immediately conveyed the tone of the movie he wanted to make.

That's one of many touches that made this film special. The hand-ground camera lenses used back then made photos super focused (almost 3-D) in the center but out of focus and darker around the edges. I own and have seen many photos (Ambrotypes and Daguerreotypes)from that era, and to me that touch really helped set the period mood. I also liked the washed-out appearance of the film, and how many camera shots were made looking through wavy window glass typical of that era.