Do you have some links to some videos or other examples? They might provide a good indication as to how you might proceed.
From what I know there was an attempt, but it's back in 2004 and it died out, maybe there's some useful information?https://forums.shoryuken.com/t/make-new-sprites-starting-with-morrigan/8424
Also, from my research today there are some programs that can let you swap images in an ISO file, such as Game Graphics Studiohttps://www.youtube.com/watch?v=72oSc93v2_M&ab_channel=PES6Jhttp://obsrvfun.nusutto.jp/99_blank054.html
But I don't know if it let you replace sprites from a PS2 fighting game since these files might be working differently than normal images.
As for the sprites, I plan to use the CVS style Morrigan sprites made by li kunhttps://www.youtube.com/watch?v=2_-b_uQRujE&ab_channel=LiKun
Which is used in many mugen characters such as Master Morrigan and Awakened Morrigan, and it is too awesome and glorious to not be ported back to CVS2. He also makes many equally detailed CVS style sprites for other characters, very talented guy.
My goal with this project is to give Morrigan a much better sprite work that fits with the rest of the casts while retain original gameplay. Tho I'm not very skilled in modding, I'll try my best. If anyone is also interested in giving Morrigan a better sprites and wants to work on this project too, than by all means, take it over, I don't want credits for anything, I just want to play a game where Morrigan doesn't look like she has "low effort" writing all over her.