I actually the I played the demo of Black Knight Sword earlier in the year. The game seemed okay, but not enough for me to make a purchase given the alternatives. I have to give them props for the puppet show look though.
There are actually a lot of 2D games that use skeletal animation. Dragon's Crown, Rayman, and Limbo are a few that come to mind for current-gen consoles. That being said, I prefer animation that with frames drawn individually (ex: Skullgirls , Earthworm Jim, and Darkstalkers) because they tend to be better at conveying a sense of weight for some reason. Unfortunately, it is also more labor-intensive for the same amount of animations and take up a lot more memory due the number of images needed.