Custom Mega Man Boss

[Thanatos-Zero]

I suggest you to use a white, with a tint of yellow in it. This way you do not need to resort to a bigger second layer. Instead you can use the second layer to give your sprite more colours for his face. One 8x8 sprite is enough for the second layer.

As for the mugshot in the stage select, it is a background object with sprites in it.
Background objects or rather background tiles are different comparred to the sprites. They never flicker and therefore can make better use of their own 4 palettes, which also consist of 3+1 colours per palette.
A background tile is always minimally 16x16 pixels big in height and lenght.
Unlike sprites, you cannot combine them to get out more colourful tiles, but you can use sprites in it to increase the colour count.

Normally you can only give a 16x16 in pixel sized background tile its own palette unless you have the MMC5 Mapper for your NES game available, which allows you to give a 8x8 tile from the 16x16 background tile its own palette. However all games after Megaman 2 use the MMC3 Mapper, which is similiar to the MMC5, but not as advanced as the latter. The MMC3 allows in any case for more space to be used which are 512 KB. Megaman 1 and 2 used the MMC1 Mapper which only allowed a maximum of 256KB for space to used. The MMC5 Mapper uses astonishing 1024KB, but was never offically used for a Megaman game.
Only a few Megaman hacks use the MMC5 Mapper, namely Megaman Odyssey and Rockman 4 Minus Infinity.

Back to the mugshot:
Reduce the colours and compare your mugshot to those of the Megaman games. You will see, that the mugshots rarely uses shading, except the used palettes allow it.

Also the outlines with the colours in them look ugly. I suggest you to keep the outlines black. AA is usually used to make curves less blocky to make them appear more rounded for example.
In any case, try to not exceed the 8 sprites limit on a line. There are still other mugshots with sprites in the Stage Select.

Bonus:
If you are interrested, use Tile Pro Layer on Megaman 3 and look for the mugshots there. This way you can see what is used as a sprite and what is a background object.

Edit: Could you post your work in the future with the original sized sprites and background tiles? It makes easier for us to do edits, if necessary.