I know why it's doing this... I took a peek at the upload script... after user uploads their image, it passes through a script, one that will create a NEW image in it's place in a "secret" location on our server... now with php, when you use GD2 Image Manipulation to create image files, you have a choice to choose compression/quality.
Changing compression on an image that isn't already 75 from the COH client won't cause much distortion. I will assume that you take pride in those images you're using, and that the original they're taken from what almost no compression and HIGH dpi...?
If that's the case, that the script compressed an image that was originally 100 Quality to 75 causing the icky lines.
Up to you SP, but possibly changing the quality margin in the upload script to 100 would fix these... it will cause larger files on our server... but for the price of happy users, lol.