This hack was very fun. The level design is very good, but even so I have some stuff I'd like to point out:
First, this is just a suggestion, but seeing that you're aiming for a choconilla aesthetic style, you should play around more with palettes: coins & blocks, sprites, Mario or even the status bar. Most choconilla hackers do this and the results are quite pretty.
But I do have some issues with the palettes you've chosen
I honestly don't see how this is supposed to look good.
You used the same palette for the fg & bg plants. Try making a darker one for the bg plants.
The grass and trees' shade is way too bright, again try making that specific color a bit darker, and while you're at it make all the bg darker, it looks a bit strange. Actually the trees' shade is way too bright too, but if memory serves smw's original tree palette is like that too, so meh.
Now about level design:
It's hard to get this Dragon Coin without taking a hit. I'm sure you can evade this chuck and make him break the blocks, but even so this is kinda cheap for a world 1 level, specially since so far the hack's difficulty is easy-normal.
And if by any chance the player is big Mario and tries using a shell to go past the blocks:
Then again this situation could be avoided, but it isn't exactly hard to get trapped here.
The water tides, uh... Why are they there? They dind't affect any of the two levels you used them other than avoiding pitch deaths, and if this was your objetive then water tiles can do the job. But of course having them just as decoration isn't bad, but vertical scrolling makes them look REALLY bad. You can either remove them or disable vertical scrolling (this might work for the forest level but you'd still have to redesign certain parts tho).
And last but not least, the slowdown. I did get some slowdown playing on snes9x. FastROM should fix this, read lm's documentation in case you don't know how to enable it (keep in mind that you'll have to port to a clean rom before doing so).
I hope this helps you. Good luck with this!
e: well I wasn't gonna point this out cause it pretty much is a nitpick, but I'll do it anyway
This chuck enables a flying koopa generator when hit, but it won't do anything when not. I did jump on him the first time thus enabling the generator, but I'm sure a lot of people will just skip him, and not to mention that the goal tape is just ahead and this generator is kinda easy to evade if you're running. This could be used in a very clever way, but as it is right now it isn't. Just replace him with any other sprite.