I don't understand the lower quality covers on the SD card either. It should have been using the same code but with a different destination. And if they reduced the quality to save space, it would be more sensible to do that in the main memory. I'd expect most people putting in a external SD card would be using a large card with plenty of space.
Can someone with and Aura confirm what the covers look like for books on the SD card? With the higher resolution, these could look really bad.