Portrait mode malfunction. iPhone 7 Plus taking regular photos while in portrait mode.

I have quite the same problem. In my case, portrait mode is actually working but it wrongfully focuses wrong parts of the subject then ends up blurring different part such as the face.

I would try Restoring as New with iTunes which is probably better than “Erase All Content and Settings” because it completely replaces the OS, Restoring you’re BackUp may have reintroduced the issue. It might also be worth locating the existing ipsw file on the computer and delete it so iTunes downloads a fresh copy, just in case the previous had a “bug”.

http://osxdaily.com/2010/12/08/ipsw-file-location-mac-and-windows/

Portrait Mode doesn’t work too well in low light and you have to keep your distance before it seems to engage, but those don’t appear to be the cause of your issue from what you have described.

If a Restore as New fails to resolve I would advise you book a Genius appointment to get the hardware tested, Portrait uses the two cameras and one of which might not be fully functioning. You could try and test for that yourself by switching lenses in normal mode to see what happens but you need to cover one at a time when you do so you can tell it’s actually using the camera and not just digitally zoomed to 2x, if you know what I mean.

Hope some of this helps.