I don't think such a small character would ever need any 'dithering', I tried cleaning it up, raised the saturation of this little character and I think it'd look like such a cute character to play in a game..

well when it comes to his walking, the arm movements look pretty good but yeah its the legs that look really let it down.. plus the fact that you've added a shadow makes it really hard to notice where the legs are moving to, giving it a wobble.. I think its the grey (metal) bits on his legs that need altering to show his foot's being lifted..

good job