Handpainting normal directions like that takes no longer than regular painting - all you do is paint in light direction, there's nothing crazy about it ! Of course quickly sculpting the rocks would have worked too. Knowing how to do both is very valuable.
Woah. I don't know how fast the video is speed up but this should have taken ages to do. All the lasso selection she did... I agree with bb0x, you better paint a black&white heightmap and use it to generate a normalmap. But I guess she did a great job at handpainting her normal map, the result looks good !