How can I have enemies displayed as 2D sprites like in old-school shooters?

I think you got the right idea.
You could use a 3D pawn just to get reference information to help UE select the correct sprite sheet.

The third person character for example. You can reference them and get their rotation, and compare the rotation to a value that you want to trigger the corresponding sprite sheet. (but this method would only work for a static camera, if you intend the camera to rotate, then IDK what to do from there)

I’m sure you’ve already looked through these; but in case you haven’t I’ll link them anyway.