It seems that the flagger should take a look at the relevant wiki page regarding 3rd party edits.
Multiple layers of the same post have been added together so that the fading border disappear. This isn't really disallowed and would fall under "Adjustment" in help:third-party edit.
As for the upscaled part, the wiki doesn't mention anything regarding this. But given that we can replace images this shouldn't be made an argument at all.

And no, this isn't the same post as the other flagged post since you can see the editing tools there at the bottom right corner. Here not.