Checking back in on this. WPEngine is doing a mandatory upgrade for all sites to PHP 8.2 on Oct 31st so we’ll have to remove this plugin on all of our sites in the next week or so unless we hear back from you.
I’ve tried all of these steps, switching to glossy back to lossy. Turning off image optimization off and back on. I thought this could be a caching issue or CDN issue (we have CDN through WPEngine) but the actual link to the image on shortpixels cdn shows a blurry image: