While the engine comes first, I find it helps to have an idea of two things before I start coding it – sprite size and window size. Details and pictures below.
Early sprite mockups for the game
So, here’s a first stab at getting the size and style of the sprites down. They’re loosely based on some older stuff I had sat around on my hard drive, and I’m rather fond of them.
In order, these are a generic female and male sprite, a small child, and an old man. There’s four variations on a theme here, which are as follows:
1. No outline
2. Outline around the edge of each sprite
3. As 2, but the line also goes round each hand to mark the forground arm out more clearly
4. As 3, but with the background arm seperated from the body by a line
Personally, I’m torn between numbers 2 and 3, but I don’t really need to decide right now. Colours and shades certainly aren’t finalised, and there’s also some other things I would need to correct (The legs on the child are a little off, for example). The point about this style is that it’s relatively easy to make new characters. The old man, for example, is just the male sprite with no hair and the head dipped forward a bit. The shading is also delibrately simple. It makes things easier for me, but too much detail could overwhelm tiny fellows like this. I like the “less is more” approach.
Finally, a quick game window test is below. I’ve gone with 512×320. It’s a slightly odd size at first glance, but I do want quite a bit of window space around the player (We’ll see why when I talk about the engine in more detail). 512 will scale up nicely to 1024, which will mean those on a 1024×768 or 1024×640 resolution should be able to get a nice fullscreen or maximised window with everything scaled up to x2 pixels.

I’m intrigued as to what process you go through to actually code the engine. Do you store levels in external files?
For example, with JavaGame the first thing I did was fix a file format & get NPCs, World stuff to load into the right places, before fixing them together.
I’m imagining that your process, with your MMF-alike will be quite different.
And for what its worth, I’d go for 3.
Generally, everything in the game is compiled directly into the .exe file, though it’s also possible to store graphics and sound seperately in the game folder. Conversation text, for instance, is probably better stored externally, so that it’s easier to edit.
I’ll get some screenies of the layout editor and events sheet for the next update.