Thanks for all the details. I don't know that I will be able to give you answers that will fix the problem, but I will comment.
The fact that you did not have this problem with an older version of Publisher is important. MSFT seems to have messed up the way Publisher deals with images in the most recent versions. It frequently chokes on large, high resolution images in a variety
of ways. In many cases the best solution has been to resample, resize and optimize the pictures before they are inserted into Publisher using a third party image editor. Or go back to the old version of Publisher...
The fact that you created 1200 dpi original images from a PDF that certainly didn't exceed 300 dpi, certainly set you up for problems. You cannot go from 300 dpi to 1200 dpi without creating some blurring in the pictures. You can decrease dpi but not increase.
The fact that these images worked for you in past versions of Publisher is surprising to me. Never the less you might try using a third part image editor to edit and optimize the pictures to the correct size and dpi before you insert them into Publisher.
Instead of hitting the reset button on the ribbon try right clicking the inserted picture > format picture > size tab > check here to see if the aspect ratio is locked and the scale is 100%. Does the height and width under Size and Rotate agree with what
it says under Original Size? Sometimes the reset button on the ribbon menu Picture tools format > Adjust group > reset picture does not reset the size of the picture. What is most important is that the width and height are at the same % scale and that the
picture is less than 100%. But again for best results use a third party image editor to reduce the dimensions to the size needed in Publisher before inserting. Also you rarely need more than 300 dpi for any printed document.
Sometimes rotating a picture will blur it. Are you pictures blurry when they are inserted and not rotated?
As a best practice, don't coverup old pictures. Either delete them or change the picture from within the picture box.
Assuming you are recycling an old Pub file, what happens if you create a new, blank page Pub file and insert the pictures?
A comment about Word and Publisher. Though it is logical to expect two programs within Office to work the same, the assumption does not hold true when it comes to Publisher. Word, a word processor, has many features and functions that you will not find in
Publisher. Even default settings are different. Publisher, a DTP, has always been treated at the poor neglected stepchild by MSFT.
Pictures that are high dpi and reduced dimensions on a Publisher page remain uncompressed until you manually compress them. If you want to manually compress a picture in Publisher you can find the control on the picture tab of the right click format dialog,
or on the ribbon menu Picture tools format > Adjust group > compress pictures. To learn more:
Reference: Picture tool Tab - Compress Pictures: https://support.office.com/en-US/Article/Picture-Tools-Tab-1d2e8f37-922c-4032-b1c0-56c13ca50533?ui=en-US&rs=en-US&ad=US#__toc256694329
Like I said in the first paragraph I may not be able to offer a good solution, but I would first double check that the width and height of the pictures are indeed at the same % scale and that the aspect ratio is locked. Then consider the other comments I
have made and see if they lead you to a solution.
DavidF