Our problem is: Given an undirected graph, does it have a vertex cover consisting of $k$ vertices?
A vertex included in this vertex cover variant will cover every edge incident to it and every edge incident to some edge incident to it. Hence, we call this variant a vertex cover with covering radius 2.
What is the computational complexity of this problem?
It is still NP-complete. It is easy to see it is in NP. To prove its NP-completeness, we reduce the standard vertex cover problem to this problem.
Given an instance $G=(V,E)$ of vertex cover problem, we construct a new graph $G'$ based on $G$ as follows.
For each edge $(u,v)\in E$, split it into three edges $(u,u_v)$, $(u_v, v_u)$, $(v_u,v)$ where $u_v$ and $v_u$ are newly added vertices.
For each vertex $v\in V$, add three edges $(v,v_1),(v_1,v_2),(v_2,v_3)$, where $v_1,v_2$ and $v_3$ are newly added vertices.
Now we assert that $G$ has a vertex cover of size $k$ if and only if $G'$ has a vertex cover with radius 2 and of size $k+|V|$.
If $G$ has a vertex cover of size $k$, then this vertex cover as well as $v_1$'s for all $v\in V$ makes up a vertex cover of $G'$ with radius 2.
On the other hand, assume $G'$ has a vertex cover $C'$ with radius 2 and of size $k+|V|$. Note for each $v\in V$, since $(v_2,v_3)$ is covered, at least one of $v_1,v_2$ and $v_3$ should be included in $C'$. We can assume $v_1$ is always included and $v_2,v_3$ are never included in $C'$. Now the rest $k$ vertices are of either the form $u$ or the form $u_v$ where $u,v\in V$. Let $$C=\{u\in V\mid u\in C'\text{ or }u_v\in C'\text{ for some }v\}.$$
Note for each $(u,v)\in E$, $(u_v,v_u)$ is covered by $C'$, then at least one of $u, u_v, v_u, v$ is included in $C'$, which means either $u$ or $v$ is inclulded in $C$. Hence $C$ is a vertex cover of $G$, which has size no more than $k$.