Very nice demo of gameplay! I have a couple of comments and I found a glitch.
Glitch: To get that block underwater, you can't just simply swim up from below into it. You need to
hold the up key to make it open.
The top of the floor tiles are kinda weird on my eyes and I dunno if it's just me, but it kinda hurts my eyes. Any way you can make it different, yet still match SMB3?
Another thing is that when you die, the volume for the "death" music is extremely low and I can't even hear it.
I'd say to add in the points display when you kill a enemy or get a coin. It feels weird jumping on them and not seeing a number. Plus then you can add in the multiple jumps for a free man thing. ;D
As I said before, AWESOME job on this demo, and I hope to see more of your work soon.
EDIT: Just found another glitch, if you hold the up key, Mario does very extremely low jumps repeatedly. <_<
EDIT 2: Gah! Another one, tapping up in midjump makes your jump slow down.
EDIT 3: Also, if you use up all your lives, you dont get a Game Over screen. ???