Does it serve a journalistic purpose?
No. A textual description is all that's needed to convey what happened.
Does it serve a persuasive purpose?
Yes. It's a visceral and concrete illustration of the ruthlesness of $THING. (Where $THING can be substituted with whatever religion, racial group, ideology, or institution that serves your persuasive purpose. For Fox's audience, THING="Islam"; for an atheist it's THING="religion"; for a Shia muslim maybe it's THING="Sunnis".)
Should Fox be censored or penalized by the government?
Hell on. Fortunately, nobody's making this argument. Yay first amendment!
Did Fox help ISIS by publishing the video?
Counterterrorist Malcom Nance (the "Waterboarding is torture, period." guy) thinks so, but I'm not seeing a description of why. Perhaps it's a combination of morale boost and being able to exert fear-control over their own territory. Perhaps (as another slashdotter speculated) they want to provoke the West into military intervention in order to further galvanize the Islamic world against Western influence. On the other hand, gratuitous violence is generally a great way to undermine your own cause; it's hard to imagine the video winning them any friends.These are boy-apes, demonstrating dominance and waving their guns at the cosmos, thinking that they somehow matter.
Should Fox have self-censored themselves for the sake of civic duty?
Ah: that seems to be what the debate's really about, isn't it? Those who think Fox abandoned their civic duty long ago will be tempted to "yes". Those who think of Fox as "too liberal" will say "no". Those of us with a good selection of defense industry stocks in our portfolio will also say "no", while trying to stifle a sudden case of the giggles.