Arcane reach simply says that the origin square of a close blast or burst is two squares away from you--it does not specify line of sight or effect.
The clost blast/burst determines line of effect from the origin
Does that mean you could nuke through a wall to an adjacent room with no entrances or an adjacent hallway (With -5 because of no LOS, of course)
You've got to have line of effect to the origin square for the power to work. Unless the power, feat, effect etc states specifically that this is not the case, this is the case.
In this case it is functionally an area burst instead of a close burst/blast with the only real difference being that it does not provoke opportunity attacks. From Area Attacks:
Origin Square: You choose a square within an area attack’s range as the attack’s origin square, which is where you center or start the area of effect. You need line of effect from a square in your space to the origin square. For a target to be affected by an area attack, there needs to be line of effect from the origin square to the target. You don’t have to be able to see the origin square or the target, and concealment between the origin square and the target doesn’t apply. (PHB 271 emphasis added)
A close burst/blast attack still has an origin square and thus you need line of effect to it regardless of whether it's your square or another.
