Found the solution to this issue. You can have just one twig file, the custom block twig file, and access the fields inside the paragraphs.
Move the paragraph variables to inside the for loop, and replace the variables like this:
old code
["#paragraph"].field_paragraph_title.value
new code
item.entity.field_paragraph_title.value
and replace the for loop like this:
old code
{% for item in content.field_paragraph_image_block %}
new code
{% for item in content.field_paragraph_image_block['#items'] %}
Here's the new code in block--paragraph-images.html.twig, no other twigs are needed:
{% block content %}
{# block fields #}
{% set paragraph_count = content.field_paragraph_image_block['#items']|length %}
{% set paragraph_count_css = 'grid-cols-' ~ paragraph_count %}
<div class="block__content image-paragraph mb-0 grid gap-4 {{ paragraph_count_css }} " >
{% for item in content.field_paragraph_image_block['#items'] %}
{# paragraph fields #}
{% set paragraph_title = item.entity.field_paragraph_title.value %}
{% set paragraph_text = item.entity.field_paragraph_text.value %}
{% set media_id = item.entity.field_paragraph_image.target_id %}
{% set paragraph_classes = [
'paragraph-image-effect',
'image-count-' ~ paragraph_count,
] | sort | join(' ') | trim %}
<div class="{{ paragraph_classes }}">
{{ drupal_entity('media', media_id, 'original_size') }}
{{ paragraph_title }}
{{ paragraph_text }}
</div>
{% endfor %}
</div>
{% endblock %}