The green eyes actually help balance out the whole visual aesthetic of the character. You have a character that is mostly blue, and without any other colors there's just monotone. With the red shoes and the green eyes it just makes it a more complete picture over all. Really it is for the better, it makes the characters more identifiable from a distance and is going to be flat out necessary in the new official mp map that was released.
Of course, the green colors change along with the other colors, I think it isn't quite perfect... colored silver gives you red eyes iirc, maybe Inuyasha will be able to fix it. Just to be sure, this thing is being hardcoded into the three playable characters from what I know, you can't do the same thing for your characters because well- we only care about STK anyway.
Foxblitzz tends to be a little archaic when it comes to sprite art, probably because he actually knows how to do it or some other such nonsense. Anyway, its very common to have two artists with a different aesthetic to come to odds over something. I don't remember how many developers did not support giving ERZ a new look, but I know there were a few. Anyway, I'm pretty sure the majority of the dev team is in support of the green eyes on this one, so I doubt FB's whining will make much of a difference.
And don't worry about homing attack. Arf is just exaggerating it. If what he says is true, I believe it'll feel no less natural than it does in Sonic Heroes. Besides, homing-chains while going through reverse gravity areas along with turrets shooting at you and all is so much more exhilerating than what we previously had in place.