Which is besides the point, because the audio is going to be used in a strictly 8bit playback system: an old game console. Certainly can't play FLAC.
Generally, for that use case it really doesn't matter to find the "technically best option", because the whole target system and purpose is as far removed from audible perfection and "audiophile" quality and goals as anything could be, and any tiny quality gains will complety vanish in the system grain.
Above suggestion to just compress the audio to keep it loud, then simply convert to 8bit using basic dither is perfectly sound. No need to overthink it.
It just so happens I posted an example of this just earlier in the
electronic music thread. That track is 8bit 22kHz samples running on the old 16bit Protracker engine on Amiga 500/1000. To get the bass as loud and punchy as that on this antiquated audio engine, you need to do exactly the above: take care with sample (=instrument) preparation and compress the hell out of it. That is what's going to make all the difference in perceived sound quality from an 8/16bit system, not fiddling with sophisticated upsampling methods that will get you imperceivable results.