Kuso The problem ,if I can call it that ,is that your game will attract the younger gameplayer ,with its colourful graphics and "Cute" character.
Bit of a double edged sword but it never did sonic and mario any harm ,as to actually finish those games did require a fair amount of skill.
with your game it would be difficult and development heavy to downgrade or upgrade the difficulty ,as you would have to redesign the entire level for each difficulty setting....what you need is upgrades..
Looking at pepo...I see a ball with legs and no arms..so bit difficult to give him a AK47 ,to blast them bugs,and make the game easier...
But maybe some boots!...with boot for upgrades he could have defence..jump higher..run faster..trample enemies...ect ect...all things that can be spawned to varying degrees dependant on difficulty setting...maybe something to think about..it would add a good few layers to the gameplay too...
I can see it in lights "Pepo and the magic boots"... <img src="smileys/smiley20.gif" border="0" align="middle" />