If you are doing first person & can't see the character while they are walking then what does it matter?
I think you've misunderstood me at this part.
I meant animation transition in point-and-click parts where you move a hero around the 2D stage with mouse.
When character is walking, you don't have turn animations or stopping animations in this particular engine.
All you have is "standing" and "walking".
So character's moving is not smooth, it's choppy.
Personally, for what you are wanting to do, I would consider using a 3D game engine like Unreal 4 & creating an actual 3D game where you can have the camera fixed to the character perspective.
Neither I can't export anything nearly resembling valid textures out of my 3D software,
nor I have any experience in low-poly and game 3D.
It's too hard for one man to handle.
Pre-rendered is the best option, because you don't need to optimize anything.
Except video, of course.
As I said, it's better for me to stay in Flash, because my game design is made considering Flash IDE pros and cons.