I was playing around with a few sprites the other night and a thought occurred to me. What if I could draw the whole head and torso, define which edges the sprites start and stop at while rotating, and cut parts of the outside edges to simulate fluid rotation? Other parts of the characters (hair, limbs, equipped weapons) would be on seperate layers and I could try to manipulate those pieces to expand or contract while moving with the character to make it look like some points are moving closer or farther away from the player's view point. Wow, that's long-winded...

Well, I scoured the interwebz for documentation on anything that sounded similar and came up empty handed. I figured it'd look sharper, but it doesn't seem to have been tried.

Where does all this long-winded, highly speculative talk leave us on our not so intimate internet encounter? On the wrong end of the following questions! Has anyone used or seen a similar technique? Does documentation on such things exist or am I overthinking this whole thing?

Thank you in advance for any information. Negative or positive.

Any image to show what you mean? There are ample precedents of animation done by moving and replacing layers, but you seem to be suggesting using special drawing tools to take care of foreshortening, which at first sight appears very difficult and unlikely to work well.
If you embrace such a realistic art style that the appearance of your sprites would benefit from exact perspective deformation, rendering objects with 3D software and possibly retouching/redrawing every pose is straightforward and quite traditional. Non-photorealistic rendering techniques and automated image processing could allow you to avoid any manual intervention.

So, making larger sprites out of smaller ones, using scaling and rotation to do animations? Yeah, done many times already. As long as the sprites for the "pieces" are made accordingly (i.e. they're adapted to this technique) it should work fine.