First - Cool stuff from your band! A friend turned me on to a group called Kornog, and I've been on a Celtic kick.
Now, though not specifically "cletic" instruments, I have heard quite a few tunes that mix "modern" with "retro", or, mixing 8-bit sounds with sources that are closer to the real thing (if not an actually recording of the instrument).
Aivi Tran and Surrasshu come to mind immediately:
Another (though not using real instruments, he combined 8-bit with more recent sound sources):
Sanctuary RPGI am sure there are more examples out there, unfortunately, those are the only ones I have heard that I can quickly recant.
Checking out the tunes you have right now, I think the idea of mixing real with 8-bit (shoot, getting your band to write a few tunes and then infusing/substituting 8-bittiness for certain parts), is a GREAT idea. I'm already stoked about the focus on the traditional Celtic music style. I say go all out with this!
I mean... Old Hag is a great start! I just realized that you have a live performance version and an 8-bit version. Ideas I received, just from listening to those two (warning - ideas may be worse than they appear):
Going off 8-bit: Hag
-- Keep the 8-bit intro from the 8-bit version.
-- 00:07: Bring in the reeded instrument from the live version.
-- 00:11 - Guitar
-- 00:15 -- Bring in the real bass/ live instruments, paired with the 8-bit..
-- 00:35 -- bring in the real drums? (Maybe, I dunno)
In other words, I definitely think you can pull it off in addition to it being a good idea (personally).
Though, you have to also make sure this goes in tandem with sound effects. I think that, visually, if it's retro, 8-bit sounds are not mandatory, even though there are some people, or musicians, that pair "old skool" art, with "old skool" sounds. Even though we are dabbling in the past, we need not constantly revert back to it (i.e. not make solely 8-bit music every time a game is using sprites).
P.S. - Checked out the game. LOVING THE ART! It does have a rustic feel, but I think the style you are thinking about will work wonders!