Could you tell, the steps to reproduce the bug ? As I can't .

You need to have some contacts with non-square avatars. Then just add the plasmoid on the desktop and see that contact in the list, it should have a deformed avatar as it will be scaled to a square without keeping aspect ratio.

Elias, can you please confirm this is still an issue? I'd think this would be fixed long time ago.

Can't verify at the moment because of https://bugs.freedesktop.org/show_bug.cgi?id=76001

Simply creating a chat plasmoid using the regular way (right click → add widget) doesn't work as well and just leaves me with a completely blank square.

Oh it's chat plasmoid, I thought this was about the list plasmoid, sorry for any confusion then.

Does this still happen with Plasma 5 chat applet?

Simply. When I put an image and I save my recipe, it is not saved.

Dear Bug Submitter,

This bug has been in NEEDSINFO status with no change for at least 15 days. Please provide the requested information as soon as possible and set the bug status as REPORTED. Due to regular bug tracker maintenance, if the bug is still in NEEDSINFO status with no change in 30 days, the bug will be closed as RESOLVED > WORKSFORME due to lack of needed information.

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If you have already provided the requested information, please set the bug status as REPORTED so that the KDE team knows that the bug is ready to be confirmed.

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Dear Bug Submitter,

This bug has been in NEEDSINFO status with no change for at least 30 days. The bug is now closed as RESOLVED > WORKSFORME due to lack of needed information.

For more information about our bug triaging procedures please read the wiki located here: https://community.kde.org/Guidelines_and_HOWTOs/Bug_triaging

Thank you for helping us make KDE software even better for everyone!