I understand what you are saying, but I don't see SQUASHED looking images at all when I look at your product pages..
Nevertheless IH2 seems incomplete on your site.. You should review all of your IH2 settings and the image swapping module you are using.. It's possible that there are files that the image swapping module has in common with IH2. If you haven't merged the common files, you could end up with the issues you are currently having.. You will need to merge those changes in the common files using a program like Winmerge or Beyond Compare..
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