i made all art in xp version of paint.
for cutscene images i made this. first i draw characters on solid background. then i steal some appropriate google images or gifs from gifcities.org for background, place them properly, stretch, etc. then i paste characters using transparent selection. sometimes i save resulting image in .jpg and .gif back and forth to add more crust to it.
all of this can be done using xp paint and it's not even as painful as it sounds.