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I always use a hardware sprite for the main character, as a general rule. The sprites use the upper 16 colours of the palette so you can get more colours out of it without any extra blitter work, and the background palettes can change from one level to the next without affecting the sprite.
The main character there looks only 16 pixels wide so a hardware sprite would be ideal.
I also use sprites to overlay information such as score/energy, having a separate panel for this purpose is so old-fashioned. But since you can set their priority relative to the bitplanes various other possibilities are open, such as moving clouds in the background for instance, or the moon.
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