I contacted Squarespace regarding the issue. Initially, customer support suggested that my custom code was interfering with the picture effect. However, even after removing all custom CSS code and code blocks, the problem persisted. It appeared to be caused by the animated creative backgrounds. Upon reaching out to customer support again, they acknowledged an issue on their end. They assigned a Squarespace product support specialist to investigate, who determined that the problem arose from the combination of the image effect and the site-wide 'Scale' animation.
TL;DR
If you encounter this issue and happen to come across this post, simply change the site-wide animation to something other than 'Scale' and you'll be fine. The problem has been reported to Squarespace's Engineering and Design teams and will be addressed in a future update.
Shout out to Maia and Raven for their assistance in resolving this issue!
Rammy's post in Image effect bug was marked as the answer
