Proportion-wise the Sackboy body is what we wanted, but the overall look of the character doesn't look like one. A lot of people base their designs off other known objects and models, and change it until its completely different.
As a reference for the type of top-down game we're looking at making, heres a picture of the angle that we want:
We want it to be an awesome zombie-killer game. My brother has designed the zombies, will design the weapons and look and layout for the maps and such. Other than that we still have to come up with a more explored storyline.
I agree with your critique of the arms, I was planning on rounding them before I start with the rest. As for the legs, when I used mesh-smooth on the models it came out like that, but I plan on optimizing the character as well.
Thanks for the feedback and observations. Feel free to ask questions and point stuff out.