Dear Alice,
I did see the
a Roman church in Mykonos, right next to the Orthodox cathedral, in fact. I don't know if it's
the one you're talking about. Anyway, I did walk inside...it was terribly drab and boring, even by post-Vatican II Roman church standards. Didn't stay more than 30 seconds.
The vestments on that statue of St. Nicholas I found interesting for a number of reasons. First, the mixing of Roman and Byzantine vestments. Second, the fact that some of the Roman vestments were still atypical; take a look at the alb...it's red and highly decorative, as can be seen on the cuffs and at the bottom. Now, I quite like that. In fact, I think it's stunning. But the alb, in the Roman Rite, is meant to be white. I don't know if this is a "stylization" of what they imagined was going on in St. Nicholas' time, or what. The reason for the epigonation and the enlarged pallium is probably because it reflects what he may have been wearing at the time - or what, in the popular imagination, he may have been wearing at the time. He was not wearing a maniple, because I suppose the epigonation substituted for that. The chasuble itself is what I'd consider to be an early Baroque/late Gothic version. Typically Roman, in my opinion.
Was it a statue for veneration? Hmm...well, it was enclosed in glass. I venerated it as best I could, and I imagine many people do. Of course it had to be enclosed in glass, given that those vestments are very expensive, I'm sure. So while there were no flashing lights that said "THIS IS FOR VENERATION," I assume it was just like any other statue in church, for veneration and edification and beautification!

Alexis