When any effect is applied on footage, it appears shrunken/offset during playback, but normal when paused or exported

Seen this on footage/stills with matching PAR but different resolution.

Does it fix itself when rendering the affected section of the timeline?

I have seen this happen if the source footage and the timeline has a mismatch, such as using source footage with a pixel aspec ratio that don´t match the pixel aspect ration of the timeline.

One way to check this is to right click on the source file in the Project panel and choose Modify > Interpret Footage. Look for the Pixel Aspect Ratio and see what you have there.

Close that dialog and then select your timeline and go to Sequence > Sequence Settings and look for Pixel Aspect Ratio there as well. Those two should match each other, so it is important to know the actual pixel aspect ratio of the source footage. Sometimes Premiere interprets it wrong, that´s why it is important to know.