Hmm, don't be afraid of a pixelated normalmap.. it might look good being rather sharp actually.. depends on what kind of surface it's on. Usually, I only create my normal maps running part of the diffuse through and putting it at different opacity values, with a neutral background
Oh, and.. Seashells instead of wood?
As for the Ambient Occlousion (AO), sampson has got a link to a tutorial he made on it, further up this page in his sig
Soon throwing up the vote, if anyone has an entry to submit, do it now!
I'll have to run off buying snuff (snus) before I go mad though, so I'll be back in about an hour.
Cheers!