Yes, it would be great to generate thumbnails for videos - thanks for the info about FFMPEG. It looks promising but unfortunately it only works in full trust environments, so the solution won't work with most hosting companies. But that is probably true with *any* algorithm that attempts to get a thumbnail, so we may just have to accept the limitation.
I bookmarked the site for future reference.
As for using DIVX for .avi files, that is perfectly fine. I am inclined to preserve the current template because I am slightly suspicious of the DIVX Player. It is practically impossible to go to their site and download *just* the web player - they want you to download a bunch of other crap. I tweaked the template so that it automatically gets the web player in most browsers, but even then the installer wants to install a toolbar in your browser - not cool. Luckily you can uncheck the box during installation. So for now GSP ships with only .divx files using the DIVX player, but you can adjust the templates in galleryserverpro.config for other files as you did.
Roger Martin
Creator and Lead Developer of Gallery Server Pro