I'm impressed. Last time I saw the game it was pretty, but clunky and unplayable. It's legitamitely coming together though! If you do go with a broader open world concept, I think a much more resilient player character would be much more enjoyable. Having three health only, that you can't regen on your own, and few movement/dodge options doesn't really lend itself to the best parts of this game imho.
I know you're a long way off from alpha, but leaning more towards Metroidvania and away from Metal Slug is, imho, a much better design choice, since exploring and eating this world you're crafting is why we're all here, not so much level grinding.
Also, gods I hope those tasty looking villagers can't get on the menu somehow.
P.S. controller integration would be very welcome, someday.