This is a pretty good sel-out tutorial:
http://pixel-zone.rpgdx.net/shtml/tut-selout.shtmlI'm not too experienced with it myself, but I decided to try doing an edit anyway, if nothing else to make sure I know what I'm talking about

I think it does look better:

I also tried adding a shadow color for her pupils... not sure I like it though, it kind of changes the overall personality/impression of the character. But I thought I'd leave it in for comparison anyway.
It looks like you've actually done some sel-out already around her chin area. Basically just letting the shading continue to the outlines. It makes sense why it would look better, since a single outline color will look darker next to bright areas, and brighter next to dark areas. It helps define the shape of the object a lot better too, since the surface near edges is generally angled more away from you, so the light hits differently than in the center. And with so few pixels to work with, that one extra line at the edge can give a lot of information.
There seems to be a bit of a black art to it too, like dealing with the steps in curved/angled lines. Sometimes it seems to look better with the lighter shade going to the "inner" corners and dark on the "outer" corners, and sometimes the other way around.
Any sel-out masters around here want to give us both some better tips

?