Thank you for your post, it helped me to start looking for a solution to my problem and I came across this link that solved my problem.
[resolved] squashed thumbnail images (11 posts)
In this post it was suggested by Member bacree to do the following:
'OK. I solved the problem.
The thumbnails display fine in IE8 when you click on Compatibility View, but how many visitors are going to know that? about zero.
There is a meta tag you can include in the header for any webpage that will tell IE8 to load the page in compatibility view. Other browser ignore this tag, so it should only affect IE8 (and eventually, another tag will probably need to be added for IE9, becuase, well, its microsoft...). But it wasnt included in this theme for some reason. There may be a reason, because other folks have found that turning on compatibility view with the meta tag actually does not work as well as manually clicking the button, so who knows, it may cause some other bug, but so far, on the site Im working on, its working fine. This site also loads fine in Firefox and Safari, but I haven't tested any other browsers...
Anyway, here is what you do.
In the editor, open the template named "Header (header.php)"
Scroll down to where you seed the <head> tag.
After that tag, enter this code:
<meta http-equiv="X-UA-Compatible" content="IE=EmulateIE7" />
Update, and voila! no more squashed thumbnails..
Let me know if this works for you guys too.'
Presto it worked for me!
He also wrote an interesting article on this matter at
Thank you again for putting me on the right path that solved my squashed images.