This is a real interesting one, I was thinking about this. As we tried its not about power of 2 or scaling of umg. I would like to mention that I know most of the image compression fundamentals however I am not familiar with mobile settings. However I would try:
1-Can be maybe related to compression since I see that some frames are good quality. Still is good to check image sequences compression settings are right. Texture group is UI with no mip maps.
2- I highly doubt that its related to material since its quite simple material with a flipbook with the correct time node. However it is looping and lowering resolution with time loop. So I feel there could be some mip map streaming issue over there.