In a small saucepan, whisk together the sugar and cornstarch. Whisk in water. Add blueberries and cook over medium-low heat, stirring constantly, until thickened and berries are softened, about 4-5 minutes. Remove from heat and stir in lemon juice. Set aside. (Can be made ahead and refrigerated. Simply re-warm before using to top dessert).
Preheat oven to 425°F.
Melt 2 Tbsp. in the microwave and then pour into a blender or food processor. Add the eggs, milk, flour, 1 Tbsp. sugar, vanilla extract, and salt. Blend batter until smooth. Let sit in blender, while you prepare the peaches.
Heat a 12-inch cast-iron skillet over medium heat. Add the remaining 2 Tbsp. of butter and melt. Add the remaining 2 Tbsp. sugar and cook, stirring constantly, until the sugar starts to caramelize, about 2 minutes. Add peaches to skillet and increase heat to medium-high. Cook, stirring frequently, until softened, about 2 minutes.
Briefly re-blend the batter, then pour evenly over peaches. Transfer the skillet to the pre-heated oven.
Bake pancake until puffed and golden brown all over, about 18-22 minutes. It will deflate as soon as it's removed from the oven. Don't despair. That's what it is supposed to do.
Dust pancake generously with powdered sugar and top with 3 or 4 scoops of vanilla ice cream. Top ice cream with some blueberry sauce, then serve immediately right from the skillet.
Be sure to read the Ingredient and Cook's Notes above the Recipe Card, for more tips on making this recipe. Note that nutritional information does not include ice cream.