How high a resolution are we talking about? Even a 4K photo should go in fine.
Try importing the photos from the Photos item in the media pane of an iMovie Project into the timeline. They should go in without any loss in quality. The resolution of the exported video will be determined by your export settings.
If still no luck, try deleting preferences. Open iMovie while holding down the Option and Command keys and select to delete preferences in the box that appears. iMovie will open in a new library. Reopen your old library to get back to your projects. Deleting preferences is a safe procedure that will not cause data loss or disruption to your project.
Also, to rule out that the issue is confined to just this one project, try creating a new project and importing your photos into it. See if they come in at full resolution.
Also, the thumbnail displays in the iMovie project are medium resolution for editing purposes. The final exported will be better.
-- Rich