Insert Video Still onto MPEG2 video?
iMovie comes free with a Mac and can easily do what you want. Here's how I'd do it, for each section you want to replace with a freeze frame:


Decide where you want to start and stop the freeze frame.  Cut the video clip at each of those points (right-click and select "Split").
See how long (exactly) that section is.
Within that section, click on the frame you want to use for the freeze frame.  Right-click it and select "Freeze Frame".  That will create a 4-second freeze frame.
Double-click the freeze frame and set its length to exactly the length of the clip you're replacing.
With the freeze frame clip still selected, click on the "Crop" tool.  The crop will automatically apply animation (called "Ken Burns").  I would change it to "Fit".
Right click on the first half of the clip you're replacing with the still frame.  Select "Detatch Audio".  Drag that detatched audio over the first half of your freeze frame.  Select the now-silent clip and delete it.
Do step 6 again for the second half of the clip you're replacing.


That should do it! Let me know if you have any questions. (And please mark this question as "The Answer" if it's useful!)