TV lit room

[Gors]

I didn't read all your post, but when coming to spriting people in this size, you have two alternatives:

1-make the features overexxagerated, so people can see its face features and its expressions. This will ultimately result in super deformed 'anime' style or similar.
2-remove all facial features and rely on shading to represent it. A good example of this style would be Castlevania. In this case, all the expressions would then be represented by movement of the bodies.

choose which one suits your sprite the best, and work from there.