Okay, new proposal: We trim some elements and omit others, leaving us with this:
We put it at (0,390), with the understanding that we're going behind (rather than over) the tree that's going up right beside us; that will also help box it in.
In the event that the canvas gets extended twice instead of only once (which will result in another 500 px below the initial square), we extend the two cut off pieces down into the new area, if we have time.
Total area here is 176x110, which is still ambitious, but plausible.
The other option is we design something that fits on the right edge of the canvas and plan to continue into the expanded area the first time it expands (which will probably happen, the second one is less likely.)
(It's not really about being able to place all of the pixels over the course of the event so much as it is being able to command presence of our area. If we're working slowly and filling things in a little at a time, other art will move into the area we'd planned to draw in, but we can take advantage of the expanding canvas to solve for this.)
The alternative is that we take all of the individual elements and place them around the canvas, and build them separately. We really do just have a collection of small things, so we could fit them in around other artworks rather than trying to capture an entire corner / area.
I kind of hate how restrictive the color palette is with regards to actual colors. Things with an excess of browns and greys are very easy to make work, but anything with an abundance of color ends up looking very basic. For example, this guy looks fine when converted to the palette, but trying to do it with a green (for example) character just looks like a mess.