This has been my experience as well. I end up using the "Don't show images like this for this hashtag" feature but they always seem to come back.
Yet the most critical input data - direct feedback from the user on the traits that shape their interests, is completely ignored/not collected.
It definitely does. The homepage goes back to recommending a mix of my subscriptions and content generally related to them.
I like to reset my Youtube viewing history a couple times a month to see which direction my viewing habits will take my recommendations this time. I'll often ratchet into new territory. This month it was Warcraft 3: Reforged gameplay (Grubby), a game I haven't played in 15+ years.
The month before it was fiction book review channels. It's fun to change it up.
In Youtube's recent homepage update this month, they also rolled out a "Don't recommend this channel anymore" button on the dropdown which is very welcome.
But yeah it can be off-putting.
That aside, my personal experience would be vastly improved by having a "hide all images with text in it" option.
I wonder if it's because if I see a thumbnail of something unwanted, I first have to open the post in order to access the menu, so the the app counts it as a view first, adding the unwanted post to things I "engage" with.