Well… I’m a fellow user… And just like you installed yet another buggy release, figured it out, submitted a bug report, saw your post & thought at least I’m not crazy, it is a bug, I’ll tip you off to the workaround… Hope they fix it soon 🙂
Since version 1.3.1 the greyscale filter is applied on the header (and static slider image) when an overlay color is used. This makes the overlay color more obvious (even at low overlay opacity values)
I came here to report this but see that its already been reported.
I set Opacity back to 0% and my color images are back!
If this was an intentional change, I am not a fan. I can understand why some people might like grayscaled header images, but I think that should be an option you can toggle on and off. The way it was before was much better in my opinion.