Side characters are AI generated. I had to touch them up and do the blinking and talking animations. Main character is made from pre-rendered images.
I would like all character graphics to be made by hand, but I'm quite aware how long the individual updates take. Using AI in some capacity for most ingame graphics would make things easier, but I don't want to just relegate all the work to it. I still want the graphics to have some kind of personal touch.
As for mutations, what you said is pretty close to what I want to go with. Different acts will give you different mutation points which you will be able to use to unlock different mutations. I will be adding different mutagens you can extract from different animals and enemies, but you will also be able to get special mutations by interacting with certain artifacts, doing quests or just being at the right place at the right time.