I appreciate all you feedback guys, but I like and don't really want to steer too far away from the photographic/photorealistic look. I'd rather modify the world textures than make the characters look more "painted". While my approach may appear jarring to some, others like it, me included. I guess it all depends whether you played certain games of old. This will also allow my game to stand out from the rest.
Know that every character has a sequence of photos taken, so almost all are animated, and low-framerate on purpose, otherwise I would go filming them instead of taking sequences. The exception are conversation shots, which only feature one photo, and at max another making their eyes blink (I'm not sold on that yet, but got the photos taken just in case). The combat animations, on the other hand, which I have yet to take, are composed of about 8000 frames of animation per character, so any major artistic approach at modifying them would be a bit too much for me to handle.
That said, I will still search for a way to make them fit the world better (or the other way around), but it will be a filter-only approach so I can do those changes easily in batches.
Again thanks for all your feedback, it's always good to hear what everyone thinks on the subject. It has certainly given me brain material to dwell on.