For some reason, gallery mode in exhibit builder in Omeka 2.2.2 is producing fuzzy thumbnails by creating larger sized thumbnails from the 200x200 pixel thumbnails automatically generated when files are added to the site. Thank you for advice on correcting this bug.
The Exhibit Builder's gallery just lays things out so a certain number of images will appear on each row. It doesn't aim for any particular pixel size.
To combat fuzziness, you could increase the constraint size for square thumbnails in the Appearance settings, though you'd have to go back with the Derivative Images plugin to re-make the thumbnails for your existing files.
You can also configure the Exhibit Builder to use a different thumbnail type in the gallery. The regular non-square "thumbnail" may be larger and look better.