Wow, I missed the demo before, only looked at the screens...
Codewise, this is awesome. I love it
The animations when it starts up rock. The fact that the tga sets up the level (tried it, very! nice) is great. The sound effects are nice, the way the camera moves along makes the game much more dynamic (couldn't think of another word) and looks great.
I, too, think the mouse movement is too fast. Do you multiply it with time_step? I know that it can be changed with the options, but if it isn't multiplied it with time_step that might explain why you don't think it's too fast and we do. Otherwise it may just be our different preferences.
Three more things: I think the monster-idea could be enhanced if I understood the egg-(mutlihit)-type monster, I just don't see what exactly it is.
I still don't like the unbreakable rocks. it looks a little too tiled. you could add multiple models for these (chosen at random at the beginning), and maybe remove the moss from the texture, at least parts of it, to make it look more like the rocks on the sides?
Last thing: The growing moss effect is greatly done, but I think it should look a little scarier. I'm not sure what you'll use it for, but right now it's not like a "oh no don't let the scary moss get to me, I need to hurry before it grows so much that I can't move the paddle any more", it's more of a "hm... interesting... the ground texture changed. Oh, look, it's still changing..."
Just ideas for improvement...
Very, very nice work. I'd love to play more levels, maybe with a little difference in music/level look every 5 levels or so?
sorry, long post :P... take it as a compliment, maybe?^^
