Laser diode modules like yours don't really get "fuzzy" as they become damaged until they totally fail and become dim LEDs. Diodes can get damaged and loose their former peak brightness if they are run at too high current or become too hot. Blues tend to just die in my experience though and become dim LEDs.
The fuzziness you describe may be some drifting of the collimation lens (the round screw-in one). Pictures of what you are seeing would help.
I don't know who tested the power for you, but you'd need a constant modulation signal of 5V and a laser power meter to see what its actually outputting peak. There may be decreased output with increased temperature.
Replacing the diode in your module requires getting the same size can diode, resetting the bias and gain, correction of the colimation lens and realignment of the other corrective optics. Oh, and the orientation of the diode need to be correct as well. These aren't typically things that you can do on your own without experience.
If you share your location, you might find someone local-ish that would be willing to assist.
-David
"Help, help, I'm being repressed!"