I believe the setting is allowed by instance default instead of user setting in the app. It also fails to blur user avatars in nsfw posts viewed with blur enabled which results in porn being showed from the user avatars, even when the post its self is blurred.
I have the same problem, I've been trying different settings but nothing seems to work. I think it's a problem with the app because I don't encounter the same issue with my browser.
I have not. I gave up and just went to the home page in Chrome, used the three dot icon to open the menu, and clicked "Install App". It puts an icon in your apps list that is basically a browser window with no menus. You can even change the icon and name. It shows up as a separate entry in your open apps too.