Here' some thoughts for you.

I prefer the simple shading of the lower variants - much less distracting and the grass has a simple style  .

I had 2 thoughts; patterns and a ant farm link cut-through. Patterns didn't work so well but I think could if you carefully choose the right pattern...



Also edited the skin tone - its really hurting the readability of his face. It doesn't need to be this stereotypical a colour bu its merging with the hair at the moment.

I much prefer your original 2nd design...

Here's where I'd start to take it - I made a WIP to help illustrate the points...

Main thoughts are you should stick with the original design as is has loads more character. But I suppose it may not be the right kind of character for your project.

I couldn't decided if the little guy on top was a turtle or cuddly toy - my edit doesn't do him justice.

Frame 1 is rescaling non proportionally using 'Nearest Neighbor'


EDIT/

Polished some bits and pieces.

Iceman thanks for the crit. I got distracted - not being sure whether I was taking the project in an interesting enough stylistic direction. I think the answer I came to is that the animations can be a bit more fun than I was making the first ones. I was doodling and made the varied characters and thought it was more appropriate. Ease up on the realism. Make it more quirky and exaggerated.

I'll update with new character animations when I can.



and for anyone willing to pass judgment of the screen effects;
http://pixelbeard.willfaulds.com/blog/2009/3in1bit_ScreenEffects.swf
That's about the opacity I'm happy with. It also has the animated bar distortion (still not sure what to call that). Good or bad?

Can't say I have the readability problem with the mustache guy at all.

My thoughts from the mockup before last...

I like the angled walls but not the doorway in the angled wall (I can't say why - it's weird).

The road is too deep - in your first mockup the implied perspective works really well but I feel its being overruled by the really wide road (one aspect might be that the dashed lines aren't equi distant).

Overall I really like!