Coat 2 (8-inch) round cake pans with cooking spray; line bottoms with parchment paper then spray with a light coat of cooking spray.
Place granulated sugar and ¼ cup butter in a large bowl. Using hand mixer, beat at medium speed until well blended.
Add eggs, 1 at a time, beating well after each addition.Lightly spoon 1-¾ cups flour into dry measuring cups, and level with a knife.
Combine flour, baking powder, and ½ teaspoon salt, stirring well with a whisk.
Combine greek yogurt, water, banana, and 1 teaspoon vanilla. Add the flour mixture and buttermilk mixture alternately to the sugar mixture, beginning and ending with flour mixture (mix after each addition just until blended).
Pour batter into prepared pans.
Bake cake at 350° for 25 minutes or until wooden pick inserted in center comes out clean.
Cool in pans 10 minutes on a wire rack; remove from pans.
Peel off parchment paper. Cool layers completely on wire rack.
To prepare frosting:
Combine cream cheese, 2 tablespoons butter, lemon rind, ½ teaspoon vanilla, and dash of salt in a large bowl.
Beat with a mixer at high speed until fluffy.
Gradually add powdered sugar; beat at low speed just until blended.Place 1 cake layer on a plate, and spread with ⅓ cup frosting.
Arrange blueberries in a single layer over frosting, and top with remaining cake layer. Spread remaining frosting over top and sides of cake.
Decorate top of cake with more blueberries if desired. Store cake loosely covered in refrigerator.