Is it a GUI session or a TTY session?
It's a (Cocoa) GUI session that is broken, and looks bad even with I start with -q or -Q, so whatever it is doesn't seem to be related to any configuration I have. (The only thing I did between working and not-working was upgrade the OS.)
TTY sessions still work correctly. (Indeed, that's how I'm coping!) Also, what do you see in a buffer popped up by "M-x list-colors-display"?
I see a list of colors that appear reasonable. I've attached an image of what things look like; you can see the dark fringes and the black-on-black mode line too.
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