I live under a rock most of the time, so welcome to the club. What I know of, the leaks are screenshots from the devices. How a 1-on-1 chat on Signal got leaked other than by screenshots is beyond me, though. If there is a breach in Signal Protocol, there’s a breach in OMEMO, too, since OMEMO uses Signal Protocol.
From my own experience, it all depends on what software you use to view the picture. For an example, Windows 10’s own image viewer, Photos, can view the pictures as pixelated (at least it used to few years ago, might depend of GPU and whatnot), while other image viewers like qimgv lets you zoom in as close as specific words without pixelating the image.
The images below shows just this. The first image shows the image with no zoom, as how qimgv let you see the image when you open the file. The second image shows the image 100% zoomed in, and the third image shows a extreme close-up on 1 word in qimgv.
The photo was taken with the Open Camera app with a Google Pixel 6a (camera resolution set to the highest setting: 4032x3024 (12,19 MP)).
The screenshot below shows the same image, but as much zoomed in I could possible zoom in, in Fossify Gallery.