1st - Epic win for the sprite! Way the go! 
Thank you, we have Arcfalchion and VAMPelf for the best of the sprites, not to mention myself, Nayr, Shinycharmander and Dalsin on most of the others. It's a pity that our project(FE8older) didn't get as much attention as the FE4A did, I would have loved to have a lot more diversity in the spriters, and would have enjoyed having not so talented spriters try their hand at some too.

2nd - Interesting story, too bad that it still hasn't named yet. I think you should name something stone related.
I want to move away from the stones, the game will delve into a story beyond the stones and the demon king, so I don't think it's required we have something linked to the sacred stones.
The story is mostly written by myself and Nayr, we haven't any set writers for the staff. When the hack was first thought of, an ideas topic was created on the board of FEU, and members who were interested basically threw around ideas for the storyline and what characters get in and what not. Nayr and myself eventually surmised what we thought was good and put it together, and used that as a basis for this.
3rd - Ephraim is a boss. No way! *cries* My idol... T^T
Perish the thought child.
Are all the old FE8 characters playable as well as the new characters?
Sadly, not all will be playable, it's sad due to the wow!factor of some mugs, but most of the characters would be too old, or otherwise. Some characters will be playable, notably ones that effect the storyline, ones that I felt we could get a lot of storyline from, and also the characters that look really epic. So... vvv
Also, that Joshua mug is awesomely kick-ass.
We have VAMP and Kai Shiden to thank for that Joshua, and just to clarify, Joshua will be a playable character.