Just like how LHB said, the setups with fuzzies jumping are really neat. I like athletic levels and this one didn't disappoint me.

The palette setup looks good, however I believe you can make it a lot better by making your own background with a gradient and why not a layer 3 too? Since it's a sky level, you could make multiple clouds with variety speed on the background or alternatively make some clouds on front and other in behind for extra difficulty. Note on this case you may want to be really carefully to it don't turn into something annoying. You can use transparency for the layer 3, for instance, if that makes looking better.

Together with that, since it's a level full of pipes, you can make a few sublevels with either bonus or hidden dragon coins, so it makes more interesting to play with a few key secrets hidden.

You still have lot of time to finish it, so I trust you will make a pretty cool level in the end if you slowly make some gradual changes with my suggestions or LHB's.

As I said before, your level looks pretty much and that's the thing you should be proud of, although it's considerately simple.

I didn't get some of the sublevels being cave because your level is pretty much in the sky, although they're connected with pipes and these pipes can be long. Although it doesn't mean much, I would make them sky except with lot of clouds above, pretty much simulating walls, ceilings and foreground and a slight different palette so it looks different from the main level. Of course it's up to you.

Another thing I'd suggest is adding another enemy to the level, since currently it's pretty much made of fuzzy only. For example, some pokeys or superkoopa. Without them standing out, of course. The fuzzies should still be the main attraction of the level.

Now watching in the idea, I think there's some things that you may want to fix otherwise these can affect the player experience negatively:

- at 0:58 when you get to cave, you must use the throw blocks to get the vine. However, you only have two throw blocks available and it isn't that trivial to understand what you do with them and much less to hit the question block containing the vine. I'd place four in there instead, to both give the player enough chances and make it fairly challenging to get the yoshi coin at first try.

- the pipe in 2:00 looks a bit too hard to get without dying or getting hit. Maybe you should lower it by one more block or exchanging it with one of the red pipes (of course you would move the coin and make the pipe exchanged blue and vice-versa).

Oh and, why not adding a custom music to your level? -- it can change your level atmosphere for better. You could insert for example another mario level athletic theme or even some unsampled touhou song, as long it sounds athletic of course (though touhou doesn't have much skyish levels.... eeehh forget touhou i guess haha).

Either way, I think it's pretty good so good job!