I actually very much agree with your points on dithering. Ever since I returned to pixeling it's been something i've been more or less avoiding. My general ethos toward painting is to avoid rendering forms and more attempt to imply them (if that makes sense :s). I don't feel like dithering in general is particularly conducive to that form of shading.
That said I was in some what of a bind as to how to make that limited pallet work with this one, and I figured dithering to be the answer, fortunately helm has shown a really elegant way of handling the shading, something I tried my best to emulate in this edit;
There is still some dither in there, but I have tried to keep it marginal and can reduce it further if need be. Thanks again for all the wonderful comments. I am learning a world of stuff.
edit:
I was worried the harsh lighting might have ruined the nuance of the expression somewhat, so I added some quick variants. Which works the best? I honestly can't tell :x