Everything else looks more outlined and with more contrasting colors than the mermaid. Her shading is way softer and realistic than the other character and the tiles imo.

I still don't see any mismatch in this. For me it all looks quite organic.

The weird thing about the portrait is that it looks more cartoony than the sprites and it's usually the opposite?

I don't know what to say. I just like this combination, and don't see anything weird about it.

In any case, my question was not about the picture as a whole, but about the animation of a mermaid. But thank you for feedback, maybe when I look at picture with fresh eyes I will see weird things. Or maybe not.

I think it looks great but its style clashes with the tiles and the other character's style.

Guess you mean problem with perspective, but not the problem with style. I think both characters and tiles are in one style, so if we remove the armor from the succubus, then there will be the same body as that of a mermaid. But yes, there is a problem with mermaid's perspective, I agree with this.

Her arm and body become shorter by a pixel for some of the frames, it looks off. It's the sort of idle animation you'd see in an 8-bit RPG with tiny sprites, it feels out of place with a more realistic style. The arm also seems to get a pixel thinner in one of the frames.
I think it would look better to keep the body animation sub-pixel and subtle unless you have a particular movement for her to do.

I see, I will try to fix it. And yes, that was what I was guided by - old zelda-like games and other old 8-16 bit games. I think this is quite acceptable for a game that looks like a game from 16-bit console. Many Zelda-like games continued to use such idle animation on 16-bit and more bit consoles. It's something like a nostalgic tradition, so it seems to me that such an approach is quite appropriate.

I guess you were aiming a breathing animation, but now she is breathing very heavily. As she looks like some kind of mermaid or naga, I would suggest a horizontal sway instead of the vertical bounce for an idle animation.

Ok, thanks for feedback, I will try to fix it such way. And you're right, for such a creature swinging in the horisontal direction is also appropriate.
General problem for me that the sprite is too small, therefore shoulder/chest swinging is too intense while she breathing. I know that people on Pixelation like to advice example from "Chrono Trigger" in such cases, but I still don't understand how to use this. So now I have a good reason to try it again.

That being said, you can make the feet smaller and slimmer (and the hand holding the staff slimmer too) to emphasize she's still delicate underneath all the muscles.

Are you still talking about girl on bottom side? In this case I'll have to rework all the other animations too (where girl looks in other directions and does other movements, like spell casting)! It's too wasteful, I don't have much time for this project! I'm not just drawing pictures, but doing leveldesign too. And also I have 5734L3R! No way!   

Anyway, thanks for such constructive thoughts, I still will make some changes following your ideas near days.

things I did: changes to the face, some tweaks to her Tracts of Land, slightly rounded-out the top edge of her hips/thighs

Haha, I created a completely the same face on early stage! It seemed too creepy and rough, so that's why I made it more round and more younger.

And I tryed larger breast size, but it's too much for me. I like to think that her breasts are in tight corset, so they are somewhat squizzed.

I'm going to strongly disagree with the advice given here to merely emphasize breasts and waist as indicators of femininity for this lady. That's a very limiting view.

I think it will be a good contrast. The main character (I mean girl on bottom) is thin, she is a fragile and young girl. Here is her portrait for dialogs:



And on the contrary, the demoness has curvy, voluptuous forms. She is a mature woman and has seen many things in her life, so it's kind of conflict of generations. I think it's a good way to create characters contrast.

And thanks for jewelry idea, I'll try it for next boss character! 

I think the shoulders are the key thing here. Eriophora's edit is very effective, imho. The wasp waists above were making her look non-humanid to me.

Yeah, I tried to reduce the height of her shoulders by one pixel down as on Eriophora's edit and it helped! So thanks to Eriophora again! 

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So here is the new pictures:



The first one (the left one) is old version, it's just for comparison. On next one (middle one) I changed the shadow under demoness and made small edits on girl's sprite. In particular I changed the movement of her hand.
On right picture the old shadow and I didn't change the movement of girl's hand.

Also another small fixes on body and hair of demoness. I fixed breasts and dress movement, and  hands of demoness are different on both new pictures. What do you think guys, what better?

Nitpicking comment (nothing else to say, you know it is great): there is a bit of overlap on the lower left particle effect of the hovering female, it is being rendered over the stone pedestal, while her shadow is projected on the floor tile behind, so the particle should probably go behind as well

Aw, now I see it too! Thanks!

Edit: are the frame ornaments a Ys reference?

Nope. Can you show it, please?