This is somewhat cumbersome to do in a 2D game (in a 3D game it's pretty trivial). I have decided to bake the different equipment that the character currently is wearing/holding to a single sprite. I will need to sort the different equipment images depending on the type of equipment and the directions the character is facing. For instance, a sword will be behind the character if he is facing one direction and in front of the character if he is facing the opposite direction. Thankfully I've decided that this will only be implemented on the main character.
The reason for this feature is rather obvious. I won't have to redo all the characters graphics if I change the weapon from a sword to an axe.
This is starting to look more and more like an RPG. I thought I would create an action adventure game! Well the simple control schemes are still intact he-he.