Out of Battle Sprite Change?

Is this doable or is the only away to do it via battle events? Wasn't sure if I misunderstood the above

It is doable. You would need to code a function or add code to the equip funtion in banck C3. When a certain item is equipped, change the sprite ID in SRAM for the character. You would also need to keep in memory the original sprite ID, for unequipping purpose.

I did something similar a long time ago where giving the imp status on a map would give the character the imp sprite.