just jumping in after reading a couple pages and looking at the pictures, you may want to learn how to use controlnet, or just use garry's mod or some 3d software to pose a ragdoll, that way you can make the images generated a lot more consistent with the "image to image" feature instead of simply using text to imaghe, which makes for better avatars, also you should make a basic untransformed version of each character in the poses you plan to use in the future so you can simply use that image paired with Inpainting to make versions of the image where only parts are changed by each transformation, possibly in different stages for incremental changes. that way if you want to go the extra mile you can simply cut out the changed pieces and use them in a normal modular sprite setup.
edit: this would also let you easily change what clothes a character is wearing while keeping their poses and facial expressions consistent
Oh, I've toyed with that idea, but some problems come with it.
This game idea came to be from the team losing jobs in the game dev industry/losing jobs to AI/all around hate of AI, specially after seeing so many games using AI, earning a lot of money, and that money going ... nowhere, going on a circle of more AI.
So we came with the idea of using AI on a game, to "steal" back money to fund our own game with real art by real artists.
And to also show that well... it can be done, there are so many huge games on this very website that use AI, that do nothing to try and better their art, or invest the money in their own projects.
AI is terrible, and steal work from real workers and artists, and with this game I'm able to steal back some, and create more jobs and help real workers and artists, then I'm happy.
The NSFW Gaming Industry is not really well documented, while creating this game, and Feral City, I'm also documenting the creations and growth of both, and I plan on releasing some day the study of all of this.
And any extra effort (Like using 3D software for posing and character art), is going to the production of Feral City.