The portraits we want to edit are initially packed into a .rgss2a file, which we will need to extract.
1) Go to https://github.com/KatyushaScarlet/RGSS-Extractor and download the latest release. Extract the archive to a folder somewhere.
2) Open the game's folder via steam (right click on the game -> manage -> browse local files) and find the "Game.rgss2a" file. It should be in the root folder (the one steam opens initially)
3) Drag and drop the .rgss2a file on the unpacker .exe downloaded from github. This should create "Data" and "Graphics" folders in the same place where you have the .exe. Copy them back to the game's folder, and say ok to file over-writes if your system asks.
4) Delete the "Game.rgss2a" file from the game folder

Voila. The game will now read images from the folders rather than getting them from the packed file.

The images we want to edit are located in two places:

This folder contains character portraits used in combat. Each one has five expressions which switch depending on what's happening (idle, using skills, taking damage, being dead, etc).

This folder contains character portraits used in other menus (character creation, loadout, etc).

Any edits to images in these folders will also change the images in game. To replace a single character, you will need to change the five expressions and the menu image. Make sure to NOT change the image sizes, and also make sure to save your images as .png