"System" avatar is crisp and clear, while everything I upload turns fuzzy and compressed all to hell
This is like some sort of tease! As I look at my posts in my local dev environment, I see only one crisp avatar - the default System user and first post. There really should be a solution for getting crisp avatar photos to work in Vanilla Forums.
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Decrease the size of the upload (file size and dimensions), then there would be no need to resize. There are config options.
It also could be a dodgy version of gd library.
grep is your friend.
This did it for me. It allowed me to make retina-friendly thumbnails once the image is uploaded.