I agree with Todd that 'of blessed memory' probably sounds several degrees too formal for a private letter, even close to a century ago. However, it's not wrong, and the meaning is clear, so yes, you could use it in a pinch.
The problem for me is that 'bless his soul' doesn't necessarily mean that the father is dead. In my part of the US, at least, you can say it affectionately about anyone at all. (Or older speakers could; it's not that common nowadays.) It's more like just 'Och, der/die Liebe/Arme/Süße!' (Or something like that -- sorry, my German isn't really up to this.)
Maybe Todd was thinking of 'God rest his soul?' But that would indeed be more like 'Gott hab ihn selig.'
I wonder if you could do anything with a phrase like 'dear departed father' or 'late lamented father'? Those are both terribly clichéd and outdated, but they might at least get the irony across and be at least grammatically similar.
One other similar option, and the closest to the original syntax that I can think of, might be 'your sainted father.' However, for me that has more of a touch of regional AE usage, so it might sound a bit out of place for Jung, unless you could find an example of it in a few BE writers. To modern readers it could be a little misleading, because it's now uncommon and people might well just read it as the equivalent of 'saintly,' which would just mean preternaturally good, but not necessarily dead. However, I do think it was used in the 19th and early 20th centuries in exactly the sense of 'late,' so it might at least be worth considering. And I don't think it would be out of place for a Protestant, as it really does just mean 'blessed.'