I've always wanted the gi joe flag, that thing is huge. As far as my favorite toy it would have to be my Captian Gloval GI Joe custom, it was my first custom. I would also try to grab my soul of Chogokin Getter Robo G, Liger, and posiedon.
The legs do look short. Another idea to make them larger would be to saw them in 1 or 2 sections and add styrene strips in between each section. After that you might have to split the legs down the center and add a strip or two a s well. You'll also have to do some shaping with putty. I would do the same to the thighs and feet. It looks like it's coming along, keep posting pics.
Looks like a nice project. If he is able to scale the dimensions and dynamics correctly that thing will look way better than the matchbox version. I've been working on a similar custom myself. You should put this in the how to cusomize section.
Just stick to Bandai, Yamato, and Takatoku. These companies provide excellent quality toys. I only make exceptions for other companies when the toys are rare or were never made by anyone else.