Sorry, I'm back with more questions
I managed to get banners and 160A sprites working quite nicely however I've found working with 160B sprites and managing the palette to be very challenging in an environment where I need to have multiple sprites sharing a palette.
Apologies for the long winded explanation :
Using the sprite editor, I created 2 simple test sprites (attached below), both using the same 12+1 160B palette. Warrior (original sprite - red cloak)
You could also go the other way, and increase the height. I put together a wip some years back for testing having tiles occlude the player sprite, which did that...
...I'm no graphics master, but it avoids the chunky look, and I think taller sprites is a nice change.