Without further information it's hard to say, but nothing about the shader alters the base image dimensions so I think it's unlikely that the shader is doing any kind of squishing. It would be helpful to see how you put the actual button together in screen language besides just the transform, and what it looks like with/without the transform applied.
It don't think it's due to my buttons alone, since it seems to apply to all on-screen text. Here's the simplest example I could come up with:
text _("Testing testing") align (0.5,0.5) color "#00FF00"
text _("Testing testing") align (0.5,0.5) color "#00FF00" at RGBColorize(gray=["#ff33fb", "#000000"], gray_thresh=[255, 0], green=["#ffffff", "#000000"]).transform
It does the same with labels, textbuttons, and Text() displayables too. I tested the same transform with an image, and that one showed up correctly, though!
Are you able to replicate this? I tried to disable all styles and shaders that could be conflicting with it, but it's possibly still an issue on my end.