There was some chat on Brian Lough's Discord channel about Bitbank's animated GIF player library.
It's optimised for use on microcontrollers, not classic AVR but anything with ~32KB or RAM or more, and can do much better frame rates than more generic libraries. On real screens it's excellent.
As I've been fiddling around with displaying stuff on the Serial/Stream terminal I quickly hacked around one of the example sketches and made this.
Running on an ESP8266, the terminal baud rate is 230400, any higher generates garbage, playing the GIF back from a PROGMEM array. Terminal client is PuTTY.
It's obviously not high def video but it's oddly satisfying to make this ridiculous thing happen. The GIF is already optimised to mostly send changes, which helps a lot. A static GIF would display quite easily.
So displaying very basic blocky images in the terminal isn't impossible, I might look at integrating it. You'd have to 'curate' what images you displayed.
I also had a go at the badger meme GIF and because it's not optimised and sends just every line the result is far less satisfying.