Your palletes... Could use a LOT of work.

Let's see:
1. the purple lines in the water, both in levels and the overworld. (Or just make the water all purple, with proper shading of course)
2. Mario (I don't think HE's supposed to look 'evil'.)
3. The random blue path tiles on the overworld.
4. The random blue lines in the large clouds. (second to last and last screenshots)
5. The enemies in general. If you wanted to make them look more diabolical, you could have used the same colors, but just with darker shading. Certain dark shades put sort of a blackness in the colors, and in my opinion, is more associated with evil than purple. Purple (in my opinion) represents poison or sickness more.

Definitely fix issues 1-4, and find a workaround for 5. Keep in mind, these are just opinions, and that you can keep the palettes if you think they look good, but keep in mind a couple things:
1. Some people's eyes would get a bleeding or burning sensation when looking at the colors.
2. Some of the colors just don't make sense. (Like blue in the clouds and purple in the water)
3. Overall, the majority wouldn't like the palettes, and this would NOT get accepted into the hacks section.

As for the rest of the hack, (from a whole seven screenshots) your overworld needs more land decoration, but your level design actually looks decent. (At least from those >two< screenshots) It looks like you could die in the intro though.

Overall, the major thing that needs fixing are the palettes.

I'm afraid I had to remove the download link in the first post, since it contained two ROMs. The only way you're allowed to distribute hacks is as an IPS Patch, so please upload only that.

By the way, the .zip file also contained a lot of other superfluous things, such as the Lunar IPS EXE, a clean ROM, and a folder containing all the levels separately in MWL format. That's not as big of a problem as linking to ROMs, but if you intend to submit your hack to SMWC, you should leave that stuff out.