Wow, thanks for trying it out and leaving the nice comment! Very true on the Dr. Mario, I didn't even think of it at first, but now I can't unsee it.
As for difficulty, it's quite hard for me as well! I can only make it to about round 6 or 7. When I'm doing these game jams, I tend to let my play-tester play it early and often. My general rule of thumb is that if they can beat it first try I tweak the difficulty up. Well, they just kept beating it, even at the state it's at now! I made them do it a second time in a row in case it was a fluke, and they still could beat it. I was really hesitant to increase the difficulty anymore than that, so I left it as it is now. I've had a very hard time balancing this, and I still have lots to do. I think the main reason is that as you mentioned, things can escalate and get out of hand extremely quickly.