After talking it over with Steve he suggested trying to use the cache to store the thumbnails in temporarily, and then when the user saves the result would be a directory stucture. The idea is similiar to how Firefox can save webpages, by creating the directory structure of the page and saving all of the images in that directory. I figured this would work, but I didn't like the idea of having to save a folder instead of just one file.
I spent at least three hours searching around the documentation about Cache on the Mozilla Development Center but there were no examples of how to use it, and the descriptions of all the Cache related functions were very vague. However, I used this site Mozilla Cross Reference that Blake Winton suggested and found this which was exactly what I needed, to understand how the function can work together. However, I still wasn't sold on the idea of storing in the cache and having to save a directory, not just a simple file.
Before trying to manipulate the cache I tried searching for more extensions that deal with thumbnails. I found that WebReview, one of the first extensions I looked at, had been updated. I looked a lot at the source code and it had changed a lot, so I hoped to get some more information about how it stored thumbnails. Unfortunatly, when I installed it it didn't work at all, the graph portion just kept raising exceptions whenever I tried to open it. And the part that I really wanted to know, what it inserted into the database, wouldn't execute either. So, no hope for finding out how WebReview stores thumbnails.
The next extension I tried was Thumbstrip, and luckily this also has to save a lot of thumbnails. I played around with it for a bit, and saved a session. When I looked at the saved file it turns out that they did it exactly how I initially planned on doing it - the thumbnails were saved in their text form and they were very long. I tested it, going to about 25 sits, then saving it. The resulting save file was over 5mb with nearly 40,000 lines and 6 million characters. But it worked, so I figured I might as well try my initial idea.
I altered my database and tried inserting a few thumbnails - in text form - into it, and also changed the each node's mouse over div tag to show the thumbnail instead of the title. The result?