I think your edit fails on the face because it alters the style (watch out, I'm saying this in a very careful manner because it's a loaded counter-crit usually) in that the new style is not discernible. I don't see a nose, the features are muddled, they don't read.
It fails on the skirt because the gradient (whereas I'd do it with a different manner, not dithering) towards darkness shapes straight-ahead legs, whereas your edit makes her seem as if she's squatting, which isn't good.
I support your palette optimization (though I think the skirt should stay dark blue, not merge with the green) and the de-selouting where appropriate. Even when an edit isn't better than the original, everybody learns from them and talking about them and comparing them. There's no effort wasted when you try to help someone.