Well, let’s see.
First of all, I think that you should rig the model with a higher polycount. Keeping the model low in polygons may help you with the viewport performance, but I think that you could perfectly rig that character with a level 1 of subsurf applied to it. That will give much more control over deformation.
So, I would add a Subsurf modifier, and apply it. Then I would go to sculpt mode and correct some topology issues, and I would smooth certain parts of the model in order to avoid geometry artifacts (the eyes, the hip, specially in the belly).
Having done that, you should go further with the weight painting, and if shapekeys aren’t good for you, try BlenRig’s approach and add some stretchy bones to the front, back and side of the Hip, that should help with the deformation.
Remember that it is all about patience and going into detail with weight painting…