Eh, drawImage doesn't do the job at all and graphx2 i don't think can even draw the shape.
The circle fadeout is pretty complex to do in imagic or glDraw from my understanding because you're looking for a rather complex shape (rectangle with circle hole in the middle). You'll notice that the keyhole from keyhole.lua is also pretty obviously not a circle.
For a simple fadeout, there's fade.lua, however, which might not be as fancy but still lets you do fades.
http://wohlsoft.ru/pgewiki/Fade.lua
For the effect you provided... maybe it's worth doing with a shader? Not sure.