It is a priority. It's also a substantial overhaul on the backend. Add in that Weasyl was never in a finished state to begin with, having been and still being in the beta phase that whole period of time, and there has been plenty for the devteam to do, especially with the marked rise in traffic due to the events of the last year and a half. Those devs are also all volunteers with day jobs; the time they put in on Weasyl comes out of the remainder of their personal lives.
We are taking the need to change the thumbnail system seriously, but it's a big change and it takes time.