Nice job and nice pixelling but it just doesnt read 'very very very tiny tiny tiny' because your layout contradicts the title. I think the 'to scale' mountains just make this read a regular village. Ya noes???
Perhaps had you opted for a BG that was low to the ground and the mountains were just regular rocks or something that informs the viewer of the scale then it would work better from an artistic point of view.
hm. looks like that game from nitrome, worm food