Hi everyone!
I've been keeping up with thread messages as they appear in my email, but my forum password had been tucked away and forgotten. I finally took the time to find it so I can reply to a few things.
There have been lots of good ideas in this thread, especially concerning friendly sprites that follow you. A while back, Reshaper256 and I discussed this idea and wrote down several character concepts. Once sprite creation is more 'streamlined', we can try some of these out.
A few of the characters from this time period that Nintendo has already established are Error, Bagu, and Queen Seline. Error is an undeveloped character from Zelda 2, unless you count all the hilarious jokes on the web. Bagu, also from Zelda 2, made an appearance in one of the Valiant comics' stories, as Link's big, mean friend. Queen Seline is the ruler of Calatia and a capable sorceress.
I could see either of the guys throwing rocks at enemies or even swinging a sword or axe. Seline could turn enemies into frogs, as seen in Valiant Comics. I also have plans for Zelda to follow you at some point; it would be nice if she could be helpful during that time. But no promises, as I don't know if this kind of AI will be possible.
I've received requests in the past for several OoT characters, by the way, but I can't include them. Quest for Calatia takes place in much later time period, long after the rise of Ganon. So no Saria, no Darunia, no Ruto, etc.
As for the limitation of sprites not being allowed to follow you indoors, that's just an attribute placed on some of the Zelda 3 sprites. The frog/dwarf will follow you into his own shop, of course, and Zelda has no problem coming back in from the rain.