I've got the systems all put together, I pretty much just have to make the demo now and make sure everything is working. The hardest part will be weapons and items, as those systems are completely different now.
I modified the character system to allow for 4 or 8 direction sprites. So, I can use 4 direction graphics for now, but still be able to (easily) switch to 8 direction graphics later (the 4 direction setup still works like the 8 direction setup, it just only uses 4 direction graphics.)
I also got entity-map collision finished. You can't walk off the map anymore and things like water will stop you now.
Here's a new screenshot with a larger map and different test sprite:
I'll make a new entry once the demo/test is ready.