If I'm not too late to the party, on at least the sprite vs. art issue, why not both? Of course, if that would be too much work, that's understandable, but how about having the character swallowed with a pixel animation, then have art of the belly afterward on screen?
As for the second question, would be a chose a gender option, each with their own options as the story progresses. This pretty much leads to having to almost make two different games at the same time, so I wouldn't reccomend it for this one, but if you pull this one off and enjoy doing it, perhaps it might be something to keep in mind for future projects when you are feeling more ambitious.
I agree with an earlier poster on the third question, you can't choose just one
It's the all the pieces together that make a cohesive product, if one is too far off, then the whole project suffers as a result. Even if the player can't put their finger on it, it will just feel "off" and might be good, but fall short of great.
As for the last one, I've actually held off on the demo because I want to see it all for the first time as a finished product. So I most excited for seeing the game finished. That being said, I want to see it completely done instead of rushed, so take the time that you need to put out something really finished, instead of stamping done on a lesser rushed game.
Looking pretty great so far, just be sure to have fun with it too