Generating thumbnails from full-size images has been a weakness of MDID 2. Often the thumbnails ended up being pixelated, especially for line drawings and certain kind of photographs.
MDID 3 uses a different image processing library (PIL, Python Imaging Library) that produces much better results. I just created these samples for comparison:
The left thumbnails are saved at 80% quality, the ones on the right at 95% (and twice the file size), but both appear to be of reasonable detail and quality.