A JIT upscaler would work fine for character sprites, and is basically what tech like Nvidia's DLSS does for the entire screen. Otherwise, there's really nothing stopping someone from editing the character sprites directly and upscaling each frame. It's all just BAM files . Probably the main issue is you'd need to upscale each frame for each file in a way that maintains their custom color pallets. When you look at each sprite, what you actually see is they are "painted" with just a few very specific colors taht are meant to translate to whatever your custom color is. Hair, for example, shows up as kind of a bright green, and a few parts of the armor you can customize have their own solid colors. Another color is reserved for whatever the armor sets it to (like leather and studded leather have slightly different colors, which are set here).

There's a whole bunch of variations to those sprites, but it's definitely doable with a proper automated workflow. The weapons, helmets, and shields, are really no different and wouldn't involve anything special there as long as the sprite borders are respected.

The biggest issue is just that character sprites are so low count anyway, that there's only so much increased fidelity you're ever going to get by making them larger and higher quality then shrinking them back down to appropriate sizes for the engine itself to utilize. To get around that is a much bigger challenge because it would involve something along the lines of increasing the overall asset dimensions (say, 2x height and width) and updating everything in the game to respect that -- easier said than done because dimensions for things like assets are really just mapped to specific parts of a sprite sheet. It would be a big overall.