2D Sprite Highlight

Basically I am after a shader similar to the 3D silhouette outline here: http://wiki.unity3d.com/index.php/Silhouette-Outlined_Diffuse

But I am having issues managing this effect in 2D. I just want it so when I mouse over a sprite it will:

1. create a green highlight around it (done this already, although it seems imperfect)

2. the highlight will be drawn over everything except the highlighted sprite. i.e. if my sprite is half hidden behind another spite, the highlight will be drawn over the other sprite. (This currently seems impossible in 2D?)

I am wondering if a shader is the best way to go or if there is another method. Highlighting seems like it would be a pretty common concept, even in 2D, but I can't really find much to help me with it.