Yeah, that's what I was going for, stylized. Personally I don't like trying to do realistic proportions on a small scale, I prefer to show more character (though whether I'm good at it is another matter). My biggest problem is lighting, probably because of the modular way I put him together. My excuse for that is to make for easier animation: bob the skull and the ribcage seperately from each other as he moves, and animate the arms and legs seperately. Perhaps that's a bad habit. Additionally I could collapse him or blow him apart into his component pieces.
I love the edit, Helm, I can already see a lot that will help me fix him. A couple things, though - I know that individual pixel differences are noise at the typical viewing size of a monitor, but in a game I'd expect him to be blown up 2x or higher. That's why I wanted to have some details like the teeth, which could even be animated. Was that particular edit in the interest of removing noise? I'll have to experiment with more contrast in that area.
Another thing I noticed in your edit was the ribcage. His midsection looks tilted away from the viewer a bit, when what I intended was more of a barrel shape in line with the head...although maybe I'm working too small for details like that. Showing each rib does make him pop more as a skeleton.
Oh, and I know my first palette was dull, I didn't intend for it to be the final color scheme anyway - I should've mentioned that. I just started going and ran into the arm issue and wondered how it could be fixed while maintaining the style as much as possible. I do like your palette, though.
EDIT: Update with a few different tries.
Feel free to ignore the cleaver thing, just messing around.