1. The Mario sprite in the periscope looks like it's unevenly stretched.
2. It wasn't all that humorous, but I'll give you the benefit of the doubt and let you build your plot more before claiming anything.
3. That building Mario's on looks too much like a Paint drawing. Add just a little detail next time.
4. The giant Mario is an extremely stretched. Maybe use some bigger sprites for it. Like that Lou Albano sheet at the Shyguy Kingdom.
5. ...Heh, a BFAA reference. Just make sure you give credit to the original spriters if you use their sprites.
As for the blurriness, did you save as a PNG? If that doesn't work, then you might want to use a different image host, like
Slide.