I can't get new characters to work, I feel like the "uploading to a image host and downloading back" thing, should be changed, and not just due to my experience, it's also redundant .
Make sure that the image hosting site works (Igmur is a good example), and that you copy the address of the image within the website, to the .json file for the custom character.
Here's a good guide that I found on GameBanana:
https://docs.google.com/document/d/1sp1gaAgysC3LWSKUNcY8PWmmfbjJlUKgbxpi1Q4c5b0/...
(it's a Google Docs guide)