The darker colour on the sword is so close to the lighter that it's nearly invisible now. It's funny, because the darker tone you've used on the face is better in terms of contrast. You might consider reusing it on the blade (that way you'd reduce your palette size as well). It's just a thought, but you might try playing around with the rest of your palette, too. True gray tends to leave the eye a little under stimulated.
As far as an alternative to the massive sword, why not do as Ryona suggested and give him the standard katana? Stylize it, make it interesting, but keep it slim, and more.. I dunno... believably manageable. If you do want to stick with the over-sized sword, I'd say try to steer clear of the now ubiquitous buster sword look. Again though, it's your sprite, so take it where ever you like.
