Cool!
I think the characters are too skinny, which makes it harder to see what is going on gameplay wise. Also that the limbs are not attached to each other makes things hard to recognize. If leg parts looked significantly different than arm parts the player would have a better scope on the happenings. Lower and upper arm parts could look different too, less like a box. Have you experimented with this?
Otherwise I like it.
Will there be knock downs? What about blunt weapons like a bat or nunchucks?