That is a good idea.
ND should start using that website for the bigger cities like Fargo and Grand Forks to see if it's helpful and then more communities could start using it. It would hopefully help get some of the road problems fixed sooner....
I know that Grand Forks city/county has some GIS information available, but they could really add some cool stuff to things like the "report a problem" section of the city website.
All in all, if you wanted to you could build a site to do this on a point-to-point basis with Drupal, Gmaps, and the Location module.