The Good: The concept is wonderfully unique and something that I'm glad was done. The platforming physics are pretty solid, and the sprites have a consistently retro feel to them. The medals also provide a pretty good incentive to keep playing.
The Bad: The pixel art was very inconsistent and not really exceptional in quality. If at all possible, that might be something to outsource. There were a multitude of typos and grammatical errors throughout the game's dialogue which significantly hurt its otherwise professional appearance, so watch for those in the future. The story was kind of quintessentially "bad fanfic"-y, but it sounds like that wasn't much of the focus of the project. Also, Nightmare. Yes, I get that it was supposed to be extremely difficult because "that's what nightmares are like"--but just because death is supposed to be permanent doesn't mean you only get one attempt at Super Mario Bros.
All in all, though, Level Up! is still a pretty strong game that will probably keep bringing me back to play until I get that last damned medal. A great distraction for fans of freeroaming and/or platforming... and of course grinding maniacs. My score: 3.5 stars. The sequel looks like a very different game, but I look forward to it nonetheless.