1. Is there a sprite browser, and how do I use it? Even better are there any sprite sheets which can be downloaded?
No sprite sheets afaik, I once tried to rip them out of the data loader, but had trouble with the palettes.
Later I found that RGB colours in the palette are 6 bits only, which is widened to 8bit triplets during loading.
This evening I found DATA/MPALETTE.DAT which may be the palette of the main display.
I may try that again.
2. What format do the original graphics use? Is it 8 bit paletted images? Or 32bit images? Do things like sprite recolouring happen?
8bpp, for each screen (eg hospital display, bank manager, drug case book, graphs, etc). In the original game these were full screen, which is why they have their own palette. in Corsix-th, the "full screen dialogs" are not full screen anymore, they are just a significant part of the screen.
At least the SDL back-end (and probably also the other back-ends) renders in 32bpp. This enables display of the hospital and a 'full screen dialog' at the same time. Also, stuff like warmth colours in the map are 32bpp colours blitted into the video display.
Not sure whether recolouring is happening. In the file format description they do mention it, so it's possible.
What is certainly done is 'morphing', where two sprites are partly drawn, eg at the pharmacy, when an patient is drinking a potion. There is also a 50% and 75% transparent flag, as well as a flip-horizontal and flip-vertical flags.
I don't know what the code does with the transparent flags.