Hi there! I decided to register with this forum after I read this thread as am really interested in modifying the graphics on certain speccy games (I've been playing around with emuzwin v2.5, changing the graphics on Fairlight and Amaurote. I'd like to modify MAME to do something similar but that is a subject for a new thread :p).
Anyways, I decided to try out the Iball2 game the developer modified (I downloaded the iball2_remake.rar from his website). It looks and works pretty well. I've read the WOS thread too, it's a real shame he was hit by such harsh/bitter/unfair responses. I think his idea could have gone places, even just for prototyping new colour schemes for old games. I think the configuration (settings.txt) for the modified sprites is clever too (When 2 sprites collide, you can configure which modified sprite should be in the foreground, and which should be in the background).
I think with a game like Iball2, where sprites don't often collide or hide behind each other, then this pixel find/replace method can give good results.
I think this sort of approach lends itself best for games like Rebelstar/Rebelstar2 (Where the graphics are pretty much stationary and never overlap). Might have a go a modifying Rebelstar2 myself...
Something else, but I'd recommend keeping the new sprites the same pixel resolution as the old sprites they are replacing (I.e. Just modifying the pixel colour of the new sprites). Mainly because when sprites overlap/collide (And the emulator has trouble identifying a match), it is less obvious when the old sprites are momentarily displayed (You hardly notice it). Also, keeping everything at the same resolution also looks more faithful to the original game (You look at it and think "wow, that's cool speccy graphics", rather than "This clearly isn't a spectrum game"), but I understand this might just be my personal preference.