A new demo is out, showing an animation using software sprites. At first, that did not go well and there was much flickering. Then I added some minimal hardware acceleration to the video controller.  It does only pixel shifting and masking in hardware, which were the most costly parts in the software sprite routines. Now the sprite drawing is about five times faster, resulting in a smooth, flicker-free animation.

Here is a video showing the animation demo before and after adding the tiny hardware accelerator:

The demo only works on the real hardware, because it plays a sound effect and the emulator does not support the audio controller yet.