I'll look at some real life sheep anatomy and come back at this one. I'm trying for a cartoonie look but I think this advice still very much applies. 

I've been using real life for help with walk cycles and completely neglected this for the sheep for which now I feel silly. 

Thank you so much for your wall of text :P it makes me feel prepared to reattempt this sprite.

One small thing that could maybe help is to more define the sheep anatomy a bit. Sheeps are pretty hard to do with their wooly texture, but when you look at sheep you can still distinquish parts of the sheep like their legs, torso and neck with the the "depth" of the wool, if that make sense. With your sheep, it looks like a mass of wool with a couple legs attached on. Real-life sheep, you can see the wool from the shoulder transition into the leg because it protrudes a bit from the torso. Sorry thats a big wall of text on one small thing, goodluck!