Amazing, hugh! I've always been a huge fan of EarthWorm Jim's artwork but I never went to the lengths of research you did here, I thank you very much for the work you put to this.
Now all that is left is for us to figure out how they went about making their setpieces into tiles =O
Something that might've made the character's face glitch out so much is how similar your whites are to your skincolors. Look at Jim's very pink skintone, that would never be confused with the white of his eyes, the mouth is pretty far from the eyes and usually includes some strong skintone outlines and black areas beside the white teeth to distinguish it furhter. Pre-planning this sort of color matching would be great, and even if you plan to use black outlines in the final product I think colored outlines like those of Jim's would still be beneficial, as any antialiasing that came from resizing (use of rotsprite mentioned below sounds like a good idea) could serve as base for your cleanups.
You might want to tweak the specific alignment of your character's face features since they all seem to converge on the same area and it just doesnt seem like the sprite form can ever communicate all the detail you have
Can you please update on how your process went? I'm curious about what process you finally chose.