Photoshop :: Transforming In CS2: Rotating 45 Degrees

im making a character for a computer fighting game, but ive hit a stumbling block.

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I want to rotate something thats already fairly pixelated (but its fine because the character is in constant motion, and fairly small) but rotating something 45 degrees makes it all blurry and whatnot. In this particualr frame of the characters animation, i am going to have him be still, so it will be very noticeable if i left him this way.

I know i cant expect perfect transformation because of the shape of pixels, but what is the best way to go about this so that the image comes out fairly crisp.
If its not too much to ask you to explain it to me in detail because i dont know my way around photoshop too well.

The character itself is done, im simply adding sprites that make the character have unique introductions when he faces other characters. Anyways, if anyone is interested, heres what my guy looks like in action. As you can see, his pixels arent too noticeable, only in that frame that i posted earlier.

click for larger