I like the concept of the game and i can see where you're coming from (i too grew up in the 2d Snes/Sega era) but I agree with Arek in the terms that it could be a little flawed. The levels should be preset due to possible modding and/or god modeing, yeah, players making a level un......beatable to an extent, but the idea of a level editor could be possible if you use something like the Megaman Powered up creation mode (psp, the level editor is awesome).
Also, there should be limitations on weapons and powers, etc. and i'd say the best thing for a limit, would i guess be a persons level, kinda like an rpg. I'm not saying make it an rpg, just have the level up feature, being getting experience from battle (Higher place at end=more exp.) If you do have that, if possible make different waiting rooms for different level ranges to keep things fair
Otherwise, i like the idea, kinda like maplestory i guess, but with easier customizations
