This is probably an case of "Now why haven't we done this earlier?"
Norwegian news Web site TV2 Nettavisen features still pictures grabbed from video footage in today's main story about a shootout outside Oslo: "Eks-landslagsspiller skutt." (Language: Norwegian)
I think the small thumbnail pictures really add value to the story, and I can't figure out why this isn't the norm.
The norm, in my experience, is to publish a lot of stills in one place, with just a "next" sign somewhere around the picture. Here is a typical example, from TV2 Nettavisen's rival, NRK.
TV2 Nettavisen's take on it strikes me as more modern, interactive, and journalism-oriented. In contrast, the NRK version probably generates more clicks. However, a lot of those clicks will be in vain, because they yield pictures of no interest to the site visitor.