I really like this style, but need more contrast with the background. it's kinda hard to read.

It's a bit too busy, but it looks so cheerful!

I like the happiness in this =)

So I'm guessing you want like Yoshi's Islands cutesy style? needs more perfecting.

the weird outlines/AA were intended to make the characters/interactive-objects stand out and so that everything would look reasonable on top of anything else (since the background/scenery would be constantly changing in an actual game) but I understand what you all mean

I love the idea, but this is looking severely unfinished. 

Yea, why don't you fix up the outlines a bit? and maybe add some AA on the exteriors...

 I can dig it

This is an interesting style, but it's pretty cluttered up in here.