Hi in case anybody else is having this problem too. I’ve resolved this by using AJAX Thumbnail Rebuild plugin.
I’m not sure what is the default setting since I’ve done too much trial and error, but anyway, in Theme Options – General, my ‘Post Thumbnail’ (Hard crop post thumbnails) option is unchecked.
After installing AJAX Thumbnail Rebuild you’ll have to go to every single single post and remove and reinsert the featured image. After choosing the image and before clicking ‘Set Featured Image’, click ‘Rebuild Thumbnail’ just above the set button. Quite a chore, but at least I’ve sorted them out. Fortunately it’s not necessary to do this rebuild thumbnail step for new posts.