My goodness, that is some awesome spritework!
So I've been going over the new graphics system and trying to figure out what is possible, in order to determine the best way to progress on this mod and update it for the Steam release.
So far, I'm thinking the best way to do it would be, as glossed over before, to keep only a small number of preset entities (Toads, Koopas, Shy Guys, Goombas, Bob-ombs, Beanish, maybe a few more) and have the rest of the entities be generic "archetypes" that pop up frequently throughout the Mario series (feudal, industrial, dapper, tribal, arctic, scholarly, thieving) each of which have multiple possible races they can be filled with. This can keep the world from being overcluttered by the vast number of races present throughout the series, while also increasing variety between worlds.
To cut back on spritework, many of the races should probably have the same or similarly-shaped bodies, since most are basically humanoid with animal heads, so they can all have the same clothing sprites.
There is also one idea that I suddenly had which, since it appears to be possible, is absolutely essential: the "suit" clothing item, if made of a particular creature's leather, should have its entire appearance based on that creature. Finally we can have a proper tanooki suit, penguin suit, frog suit...Yoshi suit...Nobody tell PETA.
It also means that we must finally address the forbidden question of what a naked Shy Guy looks like.