Hmm, I like this guy too, lots of potential. Reminds me of a Gunstar Heroes character. Couldn't resist having a go at the guy either.
Changes:
1. Colors: Used a 16 color palette (15 sprite colors + transparency). This is a good norm for 16 bit era character sprites.
2. Outlines: Darker ones used on the lower body, and on the edges facing away from the top light source. Less outlining inside the sprite, better to use shapes and contrast so it doesn't get too busy.
3. Eyes: Gave them a definite direction and pulled out the whites in the eyes. Your guy was kind of staring into the vast nothingness of existance. Gave him eyebrows too.
4. Pose: Reversed his right foot and rounded off the feet. That alone seemed to fix the issues with the awkwardness of the original pose.
5. Lots of other little tweaks. I should really have saved this in steps as I went along tweaking things. Sorry. If you've got any questions on how I did this or that just ask.