When you upload photos/PDFs, they are stored on our servers. We intentionally create a degraded version that is the one you find in the layout application.
These degraded versions allow you to be able to move, modify, and layout your photo album without having to work with the "real" photos, and thus without having to manage the "real weight" of these photos. With your real photos, everything would be very slow.
Once your album is finished and ordered, we use the reverse process: your degraded photos/PDFs are replaced again with the original photos you sent us. We reconstruct the document you created exactly, but with the original photos. This file is then sent for printing.
The problem of blur/colorimetry of your photo is therefore due to this intentional (but temporary) degradation.