2d graphics are more artistic and stylised in my opinion, i prefer the look of street fighter 3 over street fighter 4, sf3 is amazing in motion, but thats just my opinion. 3d has its advantages, you only have to make something once, then you can move or rotate it any way you want rather than redraw each frame. you should make a character next and animate him swinging a sword, ide be interested in how that turns out
can you add textures to the sword? that would add alot of potential. you could google a simple rust pattern and paste that on the blade