Tip: When determining a time limit, remember that players won't be as familiar with the level as you are. If you normally complete the level with the timer around 100, others might run out of time on their first try.
Use the SM64 level importer, latest version is 1.9.5, but I recommend 1.9.4, because the latest version is kind of broken. You can make your own level models in the 3D program of your choosing, most commonly used one is Sketchup 8 or Sketchup 2014.
If you mean actually edit the already in game levels and not start from scratch, export the levels from the game using an emulator. (Not that hard, just google search rip models from n64 games.) You can then open and edit the model of your choosing with sketchup. If you don't feel like ripping it yourself, models resource has a lot of models from the game ready for download as well.
Note: in the context you are using it, damn should be dam.
(edit: oops ninja'd)
Other than that I really like this level design, but the stair area around the well and the pillars of the houses should not be circles, circles are high poly and buggy in sm64, round shaped things should be made from the polygon tool with 3 - 12 sides, depending on what you are making. Circles should usually be avoided.