Hi everyone! The saga continues.
Here's an update. For awhile I was downgrading the high-res backgrounds, but the results were always several kids of awful. With a lot of fiddling I could get them to look decent, but eventually I realized that it creating 1000x more work than necessary. The extra time and care needed to make high-res backgrounds only to take even more time to downgrade them seemed extremely inefficient, and not very fair to the artist. At the rate we were going, you guys wouldn't see Deception until 2012! Fortunately, only a few backgrounds had been made so I decided to cut my losses and remake all them all from scratch.
Here's the new boat background:

Not as detailed as the original hi-def version but it fits the style of the sprites better and it's something that can be done reasonably quickly. With 30+ backgrounds to do, that's more in line with what I want.
However, I *have* decided to keep the high res character portraits:

Since the portraits are separate from the main action, the resolutions won't clash as much. Plus I like them too much to degrade them. If all those indie Jrpgs can get away with it, so can Blackwell.

So there it is! Thanks for all of the feedback, everyone. In the end, I think this was the right decision. We're back on track and we're moving at a pretty fast pace.