Hi, just noticed this topic and just tried the demo. For the most part, it's really good. I just had a couple of things I wanted to point out:
The "horse scaring" incident is too sudden and random - the fairies need to sort of sneak up and then zoom up to Epona before Link falls off. As it is, Link would have to be blind not to see them.
For the text engine: you need the small "ding" sound when you go to the next message. Also, the text flickers.
When the Skull Kid jumps on Epona, the animation is a little bit too choppy - needs more frames. Also the cool music for that section is missing.
The bushes that move when you slash them, well, don't move. But it's not a big issue really.
The sword system doesn't let you do a spin cut. If you hold the Z button down, Link simply holds the sword at the first frame of the sword swinging animation.
In the huge valley falls into, Link needs to hesitate before falling off, perhaps looking back towards the player and trying to run that way while all the while sliding down (upwards on the screen) until he finally falls
The Deku sequence is very good, although I think it needs those rustling sound effects
When the Skull Kid leaves, the door needs to actually close - it doesn't make sense for Tatl to be worrying about an open door
The Deku spin attack should destroy bushes
The whole thing stops working after you enter that door, although this is probably the end of the demo.
All in all though, it's a very good start. I hope your project succeeds.