I use RGB2PCE to convert images to PCE colors and everything digital I do in Photoshop 7. Once I got comfortable touching up graphics and doing pixel art, I began to just convert to PCE colors and then redraw pixel by pixel on a new layer. Before that, I would convert sections of a screenshot that are at least one sixteenth of the screen size down to around 15- 19 colors tops, but as low as I could go without losing too much detail and shading. Then I would touch everything up.
For original artwork, I draw everything on animation paper, scan in a clean lined drawing at 600dpi, paint it using only PCE colors, balance thd composition proportionate to PCE res, resize down to actual PCE res and then convert/touch up.