Bug: Monsters have the ability to 'hide' under items/the amulet, this surprised me quite a bit when a goblin walked out of the altar at the 'end' of the game. I think this is just a layering/precedence thing.
I also think you should try and make the game always 'perfect' winnable, ie, make it so that the game can always be won without getting hit once. I'm not sure how you would do this, specifically, but some basic points:
-Never let a creature spawn 2 squares away from the start bridge (making it impossible to move without getting hit)
-The above might be possible if there is a constant for mana potions: if you are guaranteed at least 1 potion by level two, you can spawn creatures 2 squares away (because they can use the fire spell to kill the monster)
-Never let a goblin spawn without a yeti (again, this can be allowed if potions are guaranteed)
I like the idea of a rising mana cost, the first costs 1, the second cast costs 2, etc.
I think this could be a great little time-waster, but only if you don't stray far from the puzzle element. If it starts to become a randomized thing, people are going to end up just rushing in.
Adding on to Jo's idea (in your other thread), maybe you can make it so that Level 1 has a 15% chance of an attack missing, while Level 6 has a 50% chance. This is predictable (per your calculations), and adds a level of difficulty. While on Island 1, you know you are almost guaranteed to hit. However, as you progress, the creatures become more difficult, making it harder to hit them.