I think this is patch is a great idea, it will definitely satisfy the people who prefer the original sprites of the cabin boys.
I haven't actually updated the game to the newest version myself though so I still have the older sprites..
I finally 100%ed my first save file! So I decided to delete it and try out Demise mode for a few stages. Turns out when you start you start with one hit point so any hit will kill you and most lives and power ups were indeed rigged like described.
RaYCiSS patch has been uploaded. Previous version did not restore gladiator sprite which was also changed in 1.1.0 update.
Well, with new version of the patch, this is fixed and gladiator also has old design: