I’ll be looking into this today. What I’m seeing on my site is that images published from WordPress are displayed correctly until Discourse attempts to download the remote image. When that is done, I’m ending up with markup like you are getting in the post:
I am not sure if this is related to changes in WordPress 5.3.
If you are getting the We detected an API request using a deprecated authentication method warning, that will not be causing the issue you are having with images. WP Discourse versions 1.9.6 and greater should not be causing that warning. All API requests from the plugin are now using header based authentication.