Can a plugin cause permanent damage?

Yes, it’s absolutely possible for a plugin to make permanent changes to a site. The plugin could add to or modify the contents of the database and it could remove files (typically this would apply to media).

It’s not uncommon for plugins to leave behind orphaned data such as options in the database. This is fairly harmless, but sometimes plugins go overboard by adding many additional rows for options.

To be on the safe side, you should read over the plugin’s code and test the plugin on a staging site.

Hopefully the plugin you are describing is using a filter to modify the output of the post thumbnail on the fly, which would not actually modify the contents of the database, but to be sure the plugin’s code would need to be audited.

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