Thanks everyone for the logic tables and explanations of that stuff.
Yeah, the current way I'm doing the masking is to first have it overwrite a mask sprite, and then XOR the white parts in. Then to get rid of it, I XOR the white parts, XOR the mask, then rewrite the tile the character was standing on. Probably not the best way, but it works at a plenty fast enough speed for me.
And about animated sprites... Probably not. I've tried making animated versions of my character sprites, and it doesn't really work well... I'm not really good at the character sprites and everything. I'm better at the inanimate objects, the surrounding and crap. Speaking of which, I've been working on basically converting various RPGMaker sprites into 8x8 format. By hand. Oy, that is most definitely hard work. But hey, it'll give me a lot more stuff to work with, so that's good.