Yes, although to be honest the speckles became a part of the character of that screen so it was simply looking too clean and spartan without at least some kind of texture in the background. So even what you came up with with the velvet is preferable. Don't get me wrong I'm not dissing it in any way.
For the realism fading, dirt stains, scratches etc. would make a pretty good difference so I think that's a good idea. Black karate gi's in general like you used as the base underneath the ninja costume don't tend to be pitch black anyway especially if the warrior has been wearing them for a long time. I know this especially because I've owned black karate gi's myself as I used to go to karate.
The yellow parts could have some shading to make them look like the rougher material they are that lets a little light through as well. Right now they look a little too heavy\plastic although the official classic models for MK9 suffer from that as well. Mostly what the cloth parts need are to look more like cloth really.
Also just a thought but the original costume was cheaply made with plastic shin guards but I think you could probably make it look in your model a little more like colored metal shin guards..... I mean in the original sprite they where non-distinct anyway and it would be a benefit in HD to make things look a little more expensive if you know what I mean. That's usually what separates props for a big budget production from a toy replica... more expensive materials like metal vs plastic.
Those example cosplay pics posted are pretty good for reference on the cloth materials as they most likely used a cotton type material similar to a gi in the pants\shirt area... although they are obviously more of the style of later games with the tighter fitting hoods and such.. especially the face masks which I'm not even sure look like in any of the games.