There's an intriguing report on the website of the Chabad-Lubavitch, the most prominent branch of Hasidism (a Jewish mystical movement with much in common with Sufism). A stop-motion animated film has been made for kids telling the story of Israel ben Eliezier (often called the Baal Shem Tov, or "Master of the Good Name"), the Lubavitch movement's founder who lived in 18th century Poland.
One of the most unhealthy developments in modern Western culture, in my view, is the near total disappearance of the saint from the popular imagination. As God has receded from our intellectual and cultural life, so have those who best embody his message of love and service, the saints. Saints have no place in a "disenchanted" post-Protestant Reformation world governed by reason and scientific laws, so we no longer have heroes who teach anything of spiritual value.
As in Sufism, there is an abundance of wonderful stories about the wisdom and often miraculous feats of the holy men of Chasidic tradition. I'd love to see something like this based on Islam's mystical tradition, which has an incredible wealth of stories that are interesting and colorful as they are profound and edifying. Even if one doesn't take the often fantastic tales at face value, they would sure be a huge improvement over most of what kids consume on TV and other media. I'd sure prefer for my now four-year-old daughter to grow up watching a kid's version of the Tazkirat al-Awliyā than innocuous but intellectually and spiritually empty fare such as "Thomas the Tank Engine" or "Dora the Explorer." How about a different kind of "Superfriends" (Get it?), or stories about the real Jedi masters? Or even just "A Thousand and One Nights." Anything but yet another plastic, all-surface cartoon (which is why "Veggie Tales" is nice–even if you don't always agree entirely with its message, at least the kids are learning stories that mean something and have played a role in intellectual history, as opposed to pondering the vacuous ephemera of popular culture).
As for the question of the halalness of pictorial representation of revered religious figures, I'm not convinced that the traditional prohibition applies to our day with its utterly new media environment to begin with, even concerning prophets. (On this, one must concede that Shiadom often seems to be ahead of the curve.) All due respect ought to be shown to the Prophets (peace be on them), of course, but the claim that all attempts at representation are inherently demeaning to their dignity–much less that they are blasphemous–is quite debatable. And, in any case, some concessions are simply unavoidable in a world where knowledge is transmitted via images; for the current generation, if it doesn't exist on film (or in digital form), it does not exist. Moreover, I think clamation has the added benefit of being an inherently abstracting medium–I'm reminded of the surprisingly effective teaching tool of The Brick Testament–which might address some of those concerns (which caused Muslim artists to often intentionally introduce small flaws into their works as an acknowledgment of perfection only being God's). Finally, as is the case with music, if one has strong religious objections one needn't partake.
However one feels about art, our kids are already fully mesmerized by secular imagery and stories on video games, movies, smart phones, an so on. If anything, kids need more of the sacred in the pop culture that shapes their understanding of the world and right and wrong. And showing them films like "The Message" ain't gonna cut it. (Which is why "The 99" is so innovative and promising.) Perhaps instead of agonizing over whether it's haram to portray a prophet in any form whatsoever we should also ask ourselves how we will be judged if our children lose their deen and identity because we were too rigid and doctrinaire to effectively disseminate Islam's teachings in the media that today's generation is, for better or for worse, accustomed to (if not hard-wired for).
PS: As I've mentioned before, one poignant difference between saints in the Jewish and Muslim tradition is that the latters' miracles generally involve protecting coreligionists from the machinations of an outside world that is always out to get them (and the "Golem" of medieval Jewish folklore serves a similiar role).