Saw this site few days ago on HN:
http://bugmuncher.com/
Seems to be doing same sort of thing, except that the processing is being done on server side rather on client.
The problem with server side is you're limited to things that are not behind a login.
For urls true. But not if you post the html source from a bookmarklet or a script on the page.
BugMuncher founder/developer here - BugMuncher takes the entire DOM tree from the client and recreates it for the screenshot, so as long as any external CSS/images aren't behind authentication, it works fine on authenticated pages. In fact, most of our users use BugMuncher specifically on auth protected areas.