You need to actually test your level more than you have been. I found some extremely obvious errors which anyone playing through would have caught (and some not-so-obvious ones, of course).

Right off the back, these guys go around the stage and look dumb down there. It might be worth removing them completely.
(also, your message box says "these waters be sacred", yet there is very, very little water in the stage thus far. Granted, I know you said the second part of the level will be watery, so we'll see how that turns out.)

Sprite-solid blocks + Goombas = no, simply because you can throw them into the blocks and it looks awful. Try using a Bony Beetle here (and any other place you use those blocks) instead.

Might just be worth removing this sand tile. It's kind of pointless and ultimately leaves a floating pillar.

That Grinder flies off into oblivion. Again, you should have been able to catch this one in your testing.

What's the point of this upper route?

I don't get this. You've put a really easy path (going right), or a hard path (going down through the sand). Given the option, which path do you think players will always take? Either block off that upper path, or put a reward at the bottom of the harder one (i.e. a mushroom, a 1-UP, whatever).

Blind jump. Indicate it with coins (and speaking of coins, this level could use more of them).

Glitchy Dry Bones bone. Don't bother using that sprite anyway - it's pointless here.

You've went from making this room too easy to making it too hard .. AND it's still beatable without even getting the directional coin block. Shorten the room by a screen and get rid of the brown blocks there - you don't even need them.
-No screenshot, but I'd indicate where you can use the springboard with 3-4 vertical coins.
Other than that, the level is shaping up nicely now. Most of these are easy fixes, so stick with the design you have and touch the bugs up. I'd stick the midway right where the three bullet shooters are at the end, and then start on your water section.
(also, I would really like it if other people would start feedbacking this level and others as well. I'm but one person, and I'd like to hear others' thoughts.)