Appropriate sprite size?

RMVXA's normal sprite size for characters is 32 X 32 so that's how I divided up the spritesheet attached to the thread. The character design is simple to resemble atari 2600 graphics. Now there shouldn't be any size issues with RM as long as everything is up to scale, however is there such thing as too small? In other words, would walking animations not work properly for small characters?
Thanks in advance.

There seems to be no issue in the file itself in my opinion. How it looks like in the game is something you cannot really test without having the real thing before you so that is something you should test on your own. The only thing I can say is that you have to name it with a starting $ otherwise the engine will automatically read it as if it had 12 horizontal frames and 8 vertical frames. That's because VX Ace sprites usually contain 8 different characters. The $ in the name is used for both oversize sprites and sprites with less than 8 characters.

It will work in the game, but you will likely have collision issues since there is so much space around it. For example, if it walks right up next to something, it will still be a distance away due to the amount of space between the figure and the edge of the cell. I hope that makes sense.