The outline of the tree itself is bothering me -- the trunk seems two or three times too thick for the number and width of the limbs above, unless a lot had broken off -- in which case you'd see the broken and splintered stumps. The tree shading and texturing doesn't very well convey its form -- look into dithering similar colors together, for the most part, rather than dithering so much with the darkest shade. The few strands of grass look out of place -- I'd either shorten them, or surround them with masses of grasses. Heh.

The rest of it looks good, though, especially the sky.

Hmm, I started editing the first sprite a couple of weeks ago, returned to it this week and it kind of got out hand. I wanted to show how the color count could be reduced a lot without hurting the separation of parts. It bothered me how you had colors used in only one or two tiny areas, especially when they were so similar to other shades. You had a lot of messy jagged outlines, and the top left area seemed unfinished (you didn't even fill in all of the transparency ) and I also colored the internal outlines whenever it made sense (mainly where there's closer overlap or touching between the two objects).

So, uh, yeah, it's a kind of radical change from your original sprite but after all that I wasn't going to let it go to waste. I hope it can help you some in the future.

I think you're being too conservative with the anti-aliasing. If it's a long line of pixels being anti-aliased into another long line of pixels, there's going to be a decent length of anti-aliasing pixels of each transition shade. This is most obvious on the clouds and sun, where you just have single pixels of anti-aliasing at the end of long lines.

Speaking of the sun, for something so large and bright in the image, it sure isn't illuminating anything except the sky and pole. That doesn't look right. I'd either cloud over most of it so that the sunlight-breaking-through-clouds-onto-pole was much more obviouis, or illuminate all of the grass not shadowed by the mountains.

With the breathing animation: the subpixeling movement you have there is way too extreme. If you look at Metal Gear Solid sprites, they move only a few pixels at the edge of each region of colors, and definitely not several pixels in distance over the course of an animation unless they were trying to convey a lot of movement. That's not what you want in breathing; it's a subtle movement. The animation there looks more like the light source has shifted dramatically from his side to more above him.

But more importantly, that animation doesn't look like breathing, it's more like just standing taller for some reason. If you're going to the trouble of animating a character, ideally you'd want to use it to convey personality.

Hah, their eyes almost look like pistols. Intentional?