This is using ICE (and pixel particles) to instance non-distorting image samples onto a deforming mesh. In this version It is grabbing a random section of a texture, but It can be also be controlled with precision, so you can have exactly what image you wish to have at whatever particle.
I am getting increasingly interested in the potential of texture manipulation and generation in ICE.. I'm also looking forward to trying out this Image input output plugin.
si-community.com/community/viewtopic.php?f=27&t=1975 ;)
And even though this can all be done now, ideally the Softimage devs will add optimised and supported Image processing in ICE in the future.

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