Thanks for the replies guys. I have found a work around that just involves resizing all the covers to whatever is in the display xml. For example in list browse my thumb size is 400x578 and reads as follows:
“<image image=”@@thumbnail_listpage" x=“790” y=“80” w=“400” h=“578” default_image=“@@default_thumbnail_listpage” scale=“90” scale_type=“pan” attr_num=“11” attr_cur=“@@thumb_active” disable=“1” "
If I change the size of all my covers to 400x578 then I get no quality loss from artwork displayed with those dimentions. However nothing changes for other sized covers as the quality still remains cr+p.
