very nice so far, I like how you've tried to add texture to the materials and such so that leather looks like leather and hair like hair etc. It's making some odd random pixels and noise but if you cleaned it up somewhat i think it would look great.
For Uvs I think you might be able to crunch your UVs into 2 32x32 textures. You'll probably have to cut out a bit of detail though. Like snader said, textures can be facing any direction so long as the UVs line up properly. Also in the way of stretching I've found that once you start texturing after your first UV pass youll have to fix up the UVs as you go along so as to not have stretching and also so you dont get weird half pixels and such (sometimes these are just unavoidable though)
I'm still trying to understand how to texture things in 3-dimensions as well. One way to understand the lighting easier could be to light your model and then use those shadows as reference to light your textures. Obviously because of the low polys you'll have to imagine clothing folds and such but it should give you a much better idea overall.
As for the arm and leg
http://www.wonderhowto.com/how-to/video/how-to-merge-points-and-edges-on-geometry-in-blender-196570/ this tutorial may help you. (I dont use blender so
)
Hope this helps