Hi Mike,
Sorry! Mike images are displaying correctly. Gap that you see on the backend are not the exact design view that you will get on your frontend. We have designed that way if you select the image to Leftalign then it displays gap to right and bottom and if you select the image to rightalign then it display gap to the left and bottom of the image. We did it this way for the better view for the post that you clicked. I know what you are trying to say. If we did as you say then there will be gap problem on images for the post that you clicked.
If you need though then we can help you by providing you a custom CSS code. Let us know what would you like to see on the images gap with a border around OR anything else?
Thank you!