Their dignity may temporarily lessened, but not their safety. When the danger is as high as it is when they are looking for a suspect like this sniper, the occupant's safety is very much increased if cops don't have to try to guess the movements of a person they can't see clearly inside a vehicle. Is he reaching for his license? - Or a gun? These cops have the same adrenaline running through their body as you would... And this is stress... It is manageable, if they can see and control the situation. People do quirky things sometimes when you pull them over. Handling potential felony stops this way doesn't give the occupants the opportunity to look like a threat in a moment of uncertainty, and increases safety for everyone involved.
Obviously, if the police are training their weapons on the occupants, the occupants are at greater risk than if there were not guns pointed at them. I cited an example where an innocent citizen was shot in the face by a FBI agent under similar circumstances, as he attempted to comply with the agent's orders. The FBI agent expected the citizen to exit his vehicle without unbuckling his seatbelt. Oops. Well, I'm sure that guy's back on the job...heck, he might be on this case.
So, clearly, my point is correct: the police are safer, and the occupants of the vehicle are less safe.