Blake2(1024 bit state) permutation (compression function core) is basically a modified ChaCha permutation. One of the modifications is to mix in message bits (key schedule?). Given that blake2 is a hash function, designed to resist related messages (related key attack?) would it not also make a good 1024 bit block cipher?
Some of my questions regarding the resultant construction would be:
Will it be a secure block cipher?
Given that the result will be a 1024 block cipher with what appears to be a 1024 bit key (previously, the message block) would you be able to expect a 2^1024 security level? (in practice the key would likely be derived from some PRNG of a lower security level rather than opt for this overkill)
The use case will be to encrypt AD in AEAD. To make AEAD packets(large, not necessarily networking) appear as entirely random bits. AD will also include parameters of encryption for the packet along with a nonce.