I'm not sure the video is better quality than the still pics. They look about the same to me. I think we're just more forgiving of mediocre video quality.

But I think there should be some way to reduce noise on camera stills by taking two or three rapid, uncompressed 640x480 pics and then using temporal noise reduction techniques like they do in video.

The technique I'm talking of would look at the three pics and, if there is a 1-pixel dot in one pic but not the other two, get rid of it. Then, delete the three originals and compress the result. It wouldn't be the fastest way to take a picture, but it would produce much better results.