Expanding NPC Sprite sheets

So with this all the NPCs even static ones like the Espers etc. can be given full sheets?
In other words, what range of NPCs does this cover exactly?

This covers any normal size sprite sheet, which includes Ramuh, the Fairy, etc... I don't know how the game would respond to trying to expand the sheets for Odin and Tritoch, but I would imagine there are ways to fudge basic animaitons for them.

Also, would this allow for giving Banon and Leo or others like Gestahl Chocobo riding sprites, if one wanted to do that?

Yes. In fact, you don't even have to update his battle sprite in this instance since the riding sprites are never called inside battle. I was always dissapointed with how non-animated Gestahl was.