Well, technically, there wouldn't be any noticable diaphram expansion/contraction if a person at that scale was calmy standing and breathing normally, right? So, this is a question of how much exaggeration you want so that the breathing is noticable. Something totally subjective. For instance, I prefer the 1 pixel movement, whereas Jonathon wags his nose at it. neener neener
Then I have to ask, what the crap are you so bent on making him breath for? I know it's a common sprite idle animation concept, but beyond that . . . I assume you just a want a way to make the sprite feel less static. Well, your forcing the act of breathing to fill this void, yet it's requiring you to exaggerate it. Can this even work? I like to think any idea can work with enough effort, but what if you thought more outside-the-box and totally changed his idle movement to something like brushing the hair out of his face every now and then, or just turning his head to look left, or switching his standing position, or, or, or . . .
Latest animation looks like he's clenching his stomache, and not really "breathing". Why is there leg movement at all? I typically don't use my legs to breath, hehe. This is a nice effort so far tunafish, keep it up. Knowing your perseverance, I you'll follow through until this thing looks really good.