The CoP is a bit sloppy and vague here and does not really explain the basis for making these decisions.
In saying obscuring may not be required because "privacy intrusion will be minimal" ICO is presumably accepting that it is not PD - because if it is PD and is not also the PD of the applicant it is likely to be unlawful to disclose as there is no applicable Sched 2 condition. This would also typically preclude FOI disclosure too if it applies - lack of a legitimate interest
Disclosing un-obscured may then be a low risk practicable solution for un-involved bystanders.
However typically the requester is not interested in un-involved bystanders. He is interested in the PD of someone who interacts with him or his property either directly or e.g. via an identifiable vehicle. Then it is much more likely to be a s7(4) assessment although there is the intermediate case where it is the TP PD but not the applicant's PD then you must obscure under an SAR unless (unlikely) an FOI disclosure can be made
In either case you cannot resolve by policy /procedure or simply following the CoP. Each request must be decided on its own merits. A proper assessment must be made as to which category each actor falls into.
And yes - as has been pointed out - although ICO does not go into this - the use of stills can make it a lot easier under a pure SAR since there it is absolutely personal data only, not the document or medium. FOI adds complexity to this - as usual.
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