After much studying of the original and the paintover, I have come up with something that will have to do. Basically I tried to implement the suggestions from Helm's post, but was trying so hard not to deliberately copy it. What comes out is something that I'm not exactly happy with, but I'm not exactly unhappy.
1) I removed the "barrel chest" as I felt Helm was correct in that it was a bit much, especially with a limited resolution, maybe I could subtly imply the barrel chest if I had a higher resolution, but since these are so wide, anything that's big will tend to be a lot bigger and that's definitely what we don't want.
2) I'm not really sure what to do about the contrast (you can see that in my earlier reply). What I did do was to dial down the flesh tone a bit, provide a separate darker flesh tone, but what I did do was add the contrast around the neck area so you can see it better.
3) The dynamic posing in this image isn't strictly necessary since it's mostly just a kind of starter model sheet. I might decide to create a proper model sheet with the character doing various things, which means walking, running bending over to pick something up, that sort of thing, however I did try to vary it a little rather than let it be as amateurish as it looked originally. Unfortunately because I tried not to copy directly, the pose doesn't look all that great... It's an attempt, but one of many I will take with it.
4) I tried dithering, I think I went a little too crazy on it, but again I'm going to be working this stuff out, I will make a full model sheet and see if you guys can help me out. I agree though that the dithering does help it a bit. It will look especially good in motion when I get to the actual animation.
5) I actually extended the height of the head by one pixel and adding shading under the chin, also the "nose" on the front view. I figured instead of confusing the two (nose and mouth) I would have one be the nose. When the open mouth is needed I will do that when animating speaking.
I did various other tweaks to it as you can see, however even though it's not very good it's really only my second or third real attempt at pixel-art especially difficult with these wide pixels.
Critique, compliment, complain, tear up, give high praise, or whatever comes to mind -- This stuff is pretty fun.
Keith.