This is the expected behavior for uiimage component.
ImageSource property accepts JPEG, PNG, GIF, SVG file formats along with m-by-n-by-3 truecolor image array.
Recommendation is to use image files directly such as PNG format for best quality in the above coding steps.
Truecolor image array is for convenience to support image array and other file formats not supported directly. Image quality might not be be best when using truecolor image array though.