Very nice! I like the combat. I'm looking forward to seeing where the rest of the game goes. The visuals are super-charming. I can't wait to see a greater diversity of enemy behaviors.
I would personally love to see a control option for the game to be played only with the keyboard and no mouse (including the ability to navigate menus without the mouse), but that's a personal preference.
For what it's worth, the first time I played the demo, I died on the final playable screen and the game crashed, spitting out a Game Maker error about there not being such an object as the player, if I remember correctly (I meant to take down a better note on the error message).