a) GIF or PNG with manually selected palette and dithering.
In my opinion one shouldn't use dithering for printing on textile.
b) Make palette manually in Photoshop (black, white, green, blue,
darkbrown, lightbrown) by picking typical colors.
Save as racoon.ase for exchange.
Apply Live trace in Illustrator, using this palette,
Result is a vector graphic - better suited for textile than a
dithered raster graphic.
An example, not optimized.
Best regards --Gernot Hoffmann
Image reproduced as JPEG - may have more than 6 colors.
Edited: swatch exchange: *.ase
8 colors indicates textile silk screen or flexo printing where each color is applied separately and they don't mix other than creating the illusion with dithering/ halftone dots. That being so, it probably means you have indeed wasted your time. Such stuff will usually have to be doen in Illustrator or similar programs because the vector contours are required for the masks. At this point your best bet is to take your image and rebuild it using Live Trace/ the tracing tool in AI....
Thank you very much for your explanation Gernot! When you say 'choose typical colors' do you mean generic colors such as primary reds and blues or those that are typical within the image I submitted earlier? I think this could be a far more user-friendly way of submitting my idea. It's stil not ideal but i suppose I'll know for the future to hold back with the color!