This is just a tricky behavior of the Android Gallery app (and also is a good example show how to make better user experience if you have to load large images).
At first, when you click on the image thumbnail in the gallery, it will use exactly that thumbnail to display in the ImageView. Because the thumbnail is small and it needs to be scale up to fix the ImageView, you will see it blur.
While displaying the thumbnail to user, it also decoding the original image. When everything's done, the original image will be displayed instead of the thumbnail.
The Gallery also use the animation when switching between the thumbnail and original image (default layout animation you can find it in API Demos)