There have been a few threads talking about isometric games. Surely, they will come up in the search results.
I am working on one myself that uses pre-rendered 3d (inspired by old classics like Baldur's Gate).
The characters will use a lot more memory than standard sprites since every sprite will need to have 8 directions. If you want to use mirroring, it will still only save 3 animations since some of them cannot be mirrored. For example, facing straight down cannot be mirrored since it would be the same thing practically.
If you want to create the game in a 2d app like Photoshop or something, you'll need to set up some sort of guides or templates so that you can keep all the angles consistent. I recommend looking up examples or isometric games or tutorials that show some angles or samples to work with.
If you work in a 3d app (I use Modo), you just need to set up an isometric camera. I actually have 8 of these set up so I can quickly render one angle after another. I also made sure to center is so it can be auto-cropped in Construct 2 for easy importing. No way am I doing 30 frames or whatnot manually.
You'll need to set up separate obstacles if you want characters to move around (such as with pathfinding). These can be invisible. The reason for these is because you may not be able to set the hitbox of the object to do both a pathfinding obstacle and an interactive object (such as a treasure chest).
If you need characters to walk behind something (like a wall or pillar) that object has to be a separate object. All ground or background objects can be in a single picture (though you may wish to break it up if it is really big).
Every object and character will need z-sorting so they go behind one another. It's not hard to set up thanks to the fact that there are a few guides or here in the forums now.
Movement can be done with either a mouse click (like Baldur's Gate) or setting up controls. I am doing the point and click route, so I can only help with that.
It can get tricky setting up animations. I have a pathfinding box under the player that does all the work, and then the animations of the player are set based on the current angle of the pathfinding box. There can be a lot of clutter working with 8 animations at once (such as 8 idle sword animations or 8 attack animations). So, it's best to start simple and build up from there.
So, yeah. It's a lot of work. It's entirely possible though. Here is a screen from my game. Keep in mind that it is not finished.