Yes you can animate each digit separately.
Do you really want to see a small lag between units, tens, hundreds, ... when they go from 999 to 1000?
Personally, I would put the digits into PROGMEM. A small rectangle can fit even if full-colour. Monochrome rectangles are trivial.
Explain how realistic you want the effect. e.g. shadows, reflections, glare, ...
Yes, most libraries can render images colour or monochrome.
David.
Edit. The 32x400 image would be 25.6kB of PROGMEM as 565 format pixels. Or 1.6kB monochrome. i.e. colour image is not practical for Uno.