Unfortunately when you assign any permission to a site member, SharePoint will give "Limited Access" permission to other top hierarchy of it. In "Limited Access" permission member can browse other members profiles. It is SharePoint behavior and you can not change it. it is not relate to Authentication Provider.
For example: If you change the permission of an item of a list and give "Contribute" or any write access to the specific user, SharePoint will assign "Limited Access" permission to that member for the list of item and its site too. If you remove this "Limited Permission" of member from site or list, your individual permission for that item will be removed too.
Usually most of administrator need to prevent users see other users list and profiles. Currently we suggest you two solution for this purpose.
Note: The both solution is not safe, because your site members still have access to read the users profile in SharePoint infrastructure, and they may access to them with the way that we don't aware of it such as web services or other ways.
Solution 1 - Hide some item in user profile list (Recommended)
You can hide some item from view in profile list such as email address. for this you can download SharePoint Manager 2007 from here. The advantage of this solution is that you don't need to change SharePoint internal page and it also will work only for your site collection. the disadvantage in this solution is that members can't see his/her email address until they going to edit profile page, the site members still can see the list of login name of members in site.
We use this solution for this site.
Solution 2 - Changing SharePoint pages
You can change "people.aspx" and "userdisp.aspx" permission manually by changing SharePoint page. the advantage is users can't see the list of members in your site even login name, but the disadvantage is they can't view their own profile and you should give members direct link to "userdisp.aspx" page to allow them to change their own profile. another disadvantage is that you should aware of SharePoint update cause you change its internal files and it may be changed during update.