I have chosen to crop my gravatar. It should—and does, in most places—appear like this:
As you can see, that's how it's shown under this very question. However, in the Users page (linking to U&L since I'm easy to find there, but the problem is network-wide), it is shown like this:
The entire image is shown. I don't mind, particularly, given that I doubt many people would recognize me from that, but others might. And if they've chosen to only show a part of the image as their avatar, then that's what should be shown!
I'm not 100% sure about this since the images are quite small, but I think it is also shown distorted. Not the blur, that's part of the original, but the dimensions seem slightly off as though the image has been squashed to fit.
1Obviously, if you want something to be private you don't upload it and use it as your avatar, but still, if a user chose to crop, the crop should be applied everywhere.