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Check out this Daggerfall sprite re-work on Deviant Art: http://epicurius7.deviantart.com/gallery/28944731

I'd love to see more stuff like that, or even (in my dreams) the whole game in this high-res, high-colour version. Does anyone know of any other work like that?

If you take a gander 'round the XL Engine forums, there's an entire graphics overhaul project being collaborated on to coincide with DaggerXL. Some of the stuff they got going on is pretty rad.

Wow, any idea when they would be finished?

I was checking the DaggerXL as well. I didn't download anything from it since I am unsure if is complete. Didn't want to have to many more bugs than is already in the game if DaggerXL is playable.

DaggerXL at the moment is little more than just a showcase of graphics rather than a playable game. There are no quests or dialog, and some other features don't work. It has been like that for since about 2011, so I'm not holding my breath too much.