Nice work! I have been doing something similar.
I ended up forking the TinyScreen library to add support for tile maps, sprites, and a very useful drawBitmap(image,x,y). There are also some powerful screen functions that I added support to, especially the hardware copy. I also have support for cropping tiles, which makes way for scrolling.. my goal is to add native side scrolling support.
My current implementation supports alpha sprites, but they draw after the tile map. This does introduce some flicker, so I am going to work them into my scanline routine.
One thing I noticed right away is that PROGMEM is where everything must be stored, otherwise, you can quickly run out of RAM. This introduces a little bit more latency, but it is tolerable.
Here is a game I have been working on. Tile graphics need work, and the sprite call is a bit sloppy (I call it several times in a loop, rather than once, making it flicker like crazy), but it's playable. I have about 20 screens now today.
https://www.youtube.com/watch?v=h3JklWtZTzkI am using a homegrown pixel and map editor I wrote in HTML5. It needs work, but its usable. It generates C code for the graphics.
8x8 tile editor:
http://mobilesquared.com/pixels/tinyscreen.php?x=8&y=8&w=125#map editor:
http://mobilesquared.com/pixels/game.php#