By carefully choosing color pallet you could improve your character readability and overall impression. This is example of good sprites made with style similar to yours. Overall color tone is grayish but you'll get the point ->
https://31.media.tumblr.com/73911c3cd7d58596be318f3c67aa580a/tumblr_inline_n13rdx7xvR1rn6c88.pngYour orange/dog/blacksmith character is kinda hard to read, cause his paws and nose have very similar colors, as well as his ears and his hammer. You should make him a bigger, and more muscular, and change his race to bulldog or something similar.
Enchantress looks interesting, but her arms are a little weird.
You should think very carefully about character race, type and their part in the story. In Disney movies like Robin Hood(1973) every animal have specific part based on its characteristics. You could choose wolves, foxes or boars for enemy characters, cause the rabbit is the main one. Try to make it playful and interesting, cause that will sell the game.
PS For character presentation it's best to use some neutral gray as a background color.