Yeah, you can use fraps to either record video, or slow the animation down and just record an image sequence, then piece it together in an editing program. Just set the background to any solid color and chroma key it out, too, as long that same color doesn't show up anywhere on the model.
As far as I know, there isn't a way to set video as a background in model viewer.
And if you don't have fraps, here's a roundabout way of doing it: Say you want to get a video of a character walking. Set it to frame 1 of the animation, hit "Print Screen", open up photoshop, paste the image, then crop out that frame of animation. Then go back to model viewer, set it to frame 2, and repeat. It's a bit tedious, but gets the job done.