It was redesigned for CB Gallery 2.x. It's displaying as designed. If the image is larger than the container it will display the thumbnail as a background and size it with cover usage. It's the same usage found on other social sites. There are no plans to change it.

No, it won't be going back to the previous usage. This is exactly how it's done on other social sites. The gray bars next to nearly every photo (unless large and perfectly square) were causing for an ugly gallery.

I don't agree that it's ruining anything. Comparing the two screenshots you provided of before and after you're losing only a small portion of the image, but gaining a lot more clarity and consistency. If you want larger thumbnails then you need to increase the box size, which can be done under the Media parameters of the gallery.

You're welcome to make a new override template and override the CSS or the template files as needed for it to display however you like though. For media you only need to alter a single template file if you want to adjust the its HTML otherwise a single CSS file can be used. To do this make a copy of the below folder.

/components/com_comprofiler/plugin/user/plug_cbgallery/templates/default

Rename your copy to something like "mytemplate". Now delete everything in it you don't want to modify. In this case you only need item_container.php. If you want to override the CSS then create and override.css file and add your custom CSS there. Now within CB Gallery > Configuration > Parameters > Global select your new template.

Make a new template folder at the below location.

components/com_comprofiler/plugin/user/plug_cbgallery/templates/

For example a folder called "mytemplate". Next copy /components/com_comprofiler/plugin/user/plug_cbgallery/templates/default/item_container.php to /components/com_comprofiler/plugin/user/plug_cbgallery/templates/mytemplate/. Next within CB Gallery > Configuration > Global select "mytemplate" for Template. Now you can edit item_container.php within your template folder as needed.