The JPEG import process has been changed to use the slim FJPEG library together with IJGJPEG library, if FJPEG fails then IJGJPEG is used as fallback. But FJPEG is not offering color space reduction/dithering to bring RGB data down to palette based index colors. Because of this the setup somehow assumes that the output display scheme is TrueColor, color reduction is disabled and redering to non-TrueColor screen gives us garbage.
2 options to fix:
1.) Implement color palette mapping for non-TrueColor video modes, use the IJGJPEG dithering/color reduction when fall is applied
2.) for non-TrueColor video us the IJGJPEG fallback with dithering/color reduction (don't implement a solution for the FJPEG case)