Hey! Thanks a lot! I’m super happy that you like this jam and that you’re taking the time to create something for it—I can’t wait to see what you come up with!
To answer your question: Yep, fan-games or adding characters from established works are totally allowed, as long as the assets are either original or publicly available for free use (with permission from the creators, of course). For example, if Capcom allows Geiru Toneido sprites to be used in fanworks, as long as it doesn’t step on any copyright toes.
Hope that clears things up! Let me know if you have any other questions.