It dos work, but you have to use the same trick Hokutoy used to get his Village of Rage mode working (it actually works on any of the ones that say out of memory that so far have been found).
You download the mod-editing pack, run the extractor, then go to the sprites file and make 3 copies of the file it complains about - so, in this case, shadow6.gif --> shadow6a.gif, shadow6b.gif and shadow6c.gif in addition to shadow6.gif itself; if it had complaind about shadow5.gif, you'd have done that one. Then just re-compress the .pak file, and it should work...
Speaking of which, this mod looks to be great - I just hope he eventually manages to get all the music in. The Crazy 88s are insanely numerous - something like 15-20 sprites on at once all trying to beat you into a pulp.
Its great
Once its a bit longer, I fully intend to show this one to my resident Killbill fanatic, and watch him drool; only thing I don't really like quite about it is the title screen; the Bride looks too much like a charactature in it imho...