That’s a neat idea; it would be a collaborative move on behalf of the City (disclosure: they employ me, but these are my own thoughts), and would be of interest to the general public.
However, the time and effort spent doing do so would only be of use to that one site and its visitors.
A better solution, perhaps, would be for the City Council (and anyone making archives of images available in an open manner) to invest the equivalent effort in adding metadata (about the subject, location, date and licence, which should of course be open) to suitable images, and for third-party sites to then parse that metadata, and import the images. Of course, such an import could also be done by individuals, on an “as needed” (or more likely “as desired”) basis, as a crowd-sourcing activity.
The question is — what is the best way to include such metadata — internal to the image, in a format like EXIF? As scrapeabe text, on a page displaying the image, like Flickr’s metadata, such as tags? Or on such a page, but using a parsable microformat, or as a separate resource, such as RDF? Or a combination of these?
And are any third-party sites already indexing or aggregating images and their metadata in this way? If not, why not? Do we have a chicken-and-egg problem?