I'm far from a wizard with console stuff, I just know how to read technical specs, so anything I say here is just interpretation of what I've read. That said:
Full coverage 4c sprites? Not as far as I can tell, the 'window' layer is usually used for this (ie. you can build such a menu out of tiles, but not out of sprites)
You can place sprites at any position, but need to keep in mind there is a limitation of 10 sprites per scanline / 40 total onscreen. I speculate that they also have a fixed visual priority (drawn left to right, top to bottom). Someone specifically versed in GBC coding might be able to say for sure, but I'd suggest that actual GBC games would use a combination of real sprite movement, swapping sprites out, and other tricks (like the ability to flip sprites) to accomplish complex animation.
This is all taken/extrapolated from the link I gave.