Cool! Sounds like this game will be really fun and a great tool! If it could be done through wifi that'd be awesome too but would limit your content.
This is EXACTLY what I am aiming for. Why else would I be so obsessed with writing compressions and stuff for already small sprites? I really hope for a game thats completely wifi'able.
Update on the pallated sprites: This turned out to be a VERY good idea. I already have a utility that takes an uncompressed libfb sprite and converts it into a compressed libfb sprite (yes thats right libfb will have it built in). I have only converted a few of the menu sprites and one in-game sprite, all of which are rather small, and I already saved a good 15kb! I think I can get the game completely under 300 kb including all item and menu sprites with no deleted content right now.