This has been a really fun game so far. Kudos on the graphical style and fun gameplay. Really looking forward to how the game develops over time!
Personally I'm good with the character name showing above their head. I don't think there's a big impact to immersion, and I find it kind of convenient. Maybe you could make it an option in the UI to turn it on or off based on distance? Hit the best of both worlds? The new character models look neat, and the female player character design idea looks pretty cool too.