I got the same pixelated images when updating a local Kirby site from Kirby 3.9 to 4.0.0 beta. Whenever I started out with the Plainkit downloaded from the Kirby site all went fine, but earlier sites already stuffed with templates, blueprints and the works all jpg images went pixelated, not the png ones.
Following the link @mschmidt posted I found the solution from @pesto : it’s not just replacing the kirby folder in your install, but update the version number in composer.json & run composer install as well.
Just for anyone struggling with this 