Updated: this issue is now resolved.
I suspect theres a bug as some thumbnails are still being cropped.
Example: https://kbin.social/m/random/t/142699/watership-down
Edit: it also appears to crop images in the threads themselves (as seen with the screenshot posted on this reply)
https://kbin.social/m/random/t/142699/watership-down
The image being sent from the server appears to be cropped. Checking the code sending the thumbnail, it looks to be correct [ref].
(Disclaimer: It's been over 10 years since I looked at PHP code, so I could be wrong about what this code is doing)