I like what you did with carrying forward the XP and recycling it into stat boosts--it's a clever handling of the limitation.
Unfortunately, the game is nearly unplayable due to the control scheme. This control scheme is more appropriate for a racing game, not a third-person action game. Trying to maneuver the character is very counterintuitive, especially since he moves so slowly.
Another thing you will want to consider is adding sound to your games. There are bundles of music out there that you can use for free. You can also use a program like Bfxr to create old-school 8-bit-style sound effects with very little effort.
Good luck!