Polymer blends can combine the properties of two materials for more versatile high performance plastic products. In addition, increasing packaging complexity requires new blending solutions for recycling multicomponent feedstocks. Twin screw compounding is the standard technique for achieving well dispersed composites and blends, and incorporating in situ reaction yields further property improvements. In this work, a unique ultra-high speed extruder was used to simultaneously blend and compatibilize a variety of biobased and recycled polymers. Increasing the compounding speed increased the surface area available for interchange reactions; however, the high rate of mechanical energy input also led to depolymerization and side reactions. Reactions were tracked using nuclear magnetic resonance spectroscopy and the morphology of the blends was linked to the changing interfacial tension as reactions progressed. A simple rheological model was developed for predicting processing-structure-properties relationships. Process simulation was used to tie the effects of shear rate to droplet breakup and coalescence depending on chosen screw design. The work shows that the combination of experiment and simulation helps to establish greater control over this novel one-step process.