Ya this was out like the first couple weeks after CSS came out. I still don't know how they did it or if you can do it anymore. It might have been some of the developers messing around. I saw lots of VALVE in the credits.
Counter Strike source property of VALVe
Thanx VALVe for making HL & CS
I doubt it was done by the developers. :P
GMod and stop-motion seem unlikely. I don't think the GMod was out at this time, even if it was, the fog in the background move smoothly. You'd have to reposition the model REALLY fricken fast if it was stop-motion, lol.
If I´m not mistaken, that´s one of the animations Valve tested the engine with.
A friend of mine used the same (or a very similiar) animation for an NPC on a TV-screen in a map of his, so the animation has to have been made by valve.
Quite a simple trick to make that kind of a vid when you have the animation...