Hey, thanks for the feedback and thoughts.
On the controls:
Since the video doesn't explain this, I'll try to list how they are set up currently:
High Punch: B
Low Punch: (doesn't exist)
High Kick: A
Low Kick: Forward+A
RoundHouse: Back+A
Sweep: Down+Back+A
Uppercut: Down+B
Crouch Punch: Down+Forward+B
Crouch Kick: Down+A (arcade has both High and Low crouch Kicks, but only one is here)
Throw: Back+B (works really well)
Run: Forward+A+B (works really well)
Block: A+B (also easy to do)
The running and blocking is very easy to do on the real hardware. Trying to reach the Select button to Block would be similar to GB MKII which had Start be Block... it's hard to reach on the real system.
For the fighter roster:
SubZero and Scorpion are the most popular characters, so to leave out unmasked MK3 SubZero wouldn't be something that an official MK game would do. The idea here is to make a version of UMK3 that could have been an official release.
Your thought process is great though. The roster was chosen to include fighters not seen in the original GB MK3. Since Sindel was already seen in regular GB MK3, she wouldn't be new or fresh. The roster size was chosen based on what could fit into the typical size GB cartridge of the era around 1996/7. Nightwolf could definitely replace Tsung, as I think Tsung's morphing could cause gameplay problems. But Nightwolf was in the Tiger Game.com version of MK Trilogy, so he has already had his day in 8-bit form:
https://www.youtube.com/watch?v=Oty_trGqNT0
On the title screen colors:
The colors are blocked on a tile grid, and each tile is 8x8 pixels. The dragon logo on the title screen is a sprite overlaying the background layer (so it's independent), but the words "Mortal Kombat" would be hard to fit on the grid (hard to color them independently). Your color mockup is good, and fairly accurate and possible. I think the video on YouTube had de-saturated colors because of the emulator, so the real game isn't as muted as you saw. It could definitely be made more "purple".
Also, just so people know, this game isn't a "hack". It's a 100% original homebrew developed from the ground up. Let me know if you have any other ideas or thoughts for things you'd like to see.