Rear facing camera image blurry

First of all, you should stop banging your iPhone :>). With time, this will cause other issues on the logic board due to cracked solder joints.

Since you already tried re-seating the connector, the next step is to try a known-good replacement camera. That's easier said than done. Make sure you buy one from a reputable supplier and not some fly by night eBay special. You can find one here on iFixit. The defect rate on small parts is high so even if that doesn't solve your problem, it could still be the camera.