I've seem some people doing this in Newgrounds and Mugen. Also they did it in the web-series "Captain S", you should check it since its very fun.
I have some prohibited footage from MK1 Making of too (Jonhy Cage actor leaked it in his youtube channel before being taken down), you can only normally find photos from MK2 and videos of MK3, where they used the green screen trick for chromakey. But in MK1 they dont used a green or blue sheet, instead they used a very bright lamp in a dark room.