It was a good idea to use SonicRE as a base, you've edited his sprites pretty extensively. Although he could use some more differences if you want him to be fully unique enough from the base sprites. I suggest using a darker color for his skin, slightly smaller eyes, shade his hands differently, etc. Also, make his head a little more curved than it is now in certain frames, I can easily tell you only cropped out Sonic's quills and drew a line over it. You also forgot his patagium under the arms(He's a flying squirrel after all. :P) and some of the hair sticking up on the top of his head.
Also, you do actually have quite a few color choices for yellow, just take a look at SonicRE's super form. There are lots of shades of yellow in the SRB2 palette you can use to fix the shading. It wouldn't allow him to change colors properly if you used both sets of yellows that are color mapped separately, but meh, 1.1 isn't too far from now anyway. :P