You're programming this right, DDP? In you're having trouble with figuring out how to render the sprites correctly, along with collision handling, I recommend taking the 3D route. Here are my resources:
http://www.gamedev.net/topic/629496-dyna...lgorythms/
http://www.gamedev.net/topic/470599-isom...h-sorting/
The idea is to use 3D rendering to take advantage of the depth buffer so that objects will clip correctly. Also, you get to use 3D collision detection and normal 3D positions. If you use Unity, then, you pretty get isometric pixel rendering while making use of Unity's 3D editor, collision system, and lighting system.
It does require that you make approximate 3D representations of each tile, however, it's not difficult. Objects that should have considerable depth should be modeled approximately. However, characters and enemies can be represented by a billboard or quad (these are rectangles in 3D space).
http://www.gamedev.net/topic/629496-dyna...lgorythms/
http://www.gamedev.net/topic/470599-isom...h-sorting/
The idea is to use 3D rendering to take advantage of the depth buffer so that objects will clip correctly. Also, you get to use 3D collision detection and normal 3D positions. If you use Unity, then, you pretty get isometric pixel rendering while making use of Unity's 3D editor, collision system, and lighting system.
It does require that you make approximate 3D representations of each tile, however, it's not difficult. Objects that should have considerable depth should be modeled approximately. However, characters and enemies can be represented by a billboard or quad (these are rectangles in 3D space).