RE: the helmet and the specular hilight on it (that doesn't move)
What an excellent use of old skool and new skool tech. Height maps on sprites what idea...
Here's what I think regarding the helmet.
People are expressing a dissatisfaction of the white hilight on the glass - which looks weird when you've got this light source moving around and picking up the colors on the rest of the character.
You've already picked up that the height map on the helmet isn't quite right, (not round enough - at the moment it's profile is a point [I'm assuming you know what you need to do to rectify this?])
If you're using a pixel shader then it stands to reason that it's entirely possible to incorporate a specular map? I'm not sure how it could work with 2D sprites but my experience on 360 and material mapping indicates that technically it can work.
But first things first, i'd remove the hilight off the helmets. And you may need to remove the white pixel line that indicates the helmet's edge as I think this could interfere with the effect?
Also, to add an extra layer of complexity to this, you may be able to incoprate an alpha mask overlay on the sprites... if so, then perhaps this layer could be your helmet?
It's a lot of effort though... but you'd get a cracking effect at the end... especially if you're thinking of having gun flares and explosions being light sources...
This is Looking great... is the intention to publish it on XBLA?