Great, if short
At first I thought the game was too hard. But, now, having played through it a second time and actually beaten it, I think the difficulty level was just right - which is very rarely the case on Newgrounds - usually something is either insanely difficult or extremely easy.
Overall, the game felt really polished and professional - very much like playing one of the old Contra games with Pico characters. The story was also well written, for what little there was - it gave just enough justification for what you were doing so it didn't seem completely random, and it also managed to have genuinely funny moments - particularly the ending.
Also, I like the control setup. Any time I can use the arrow keys to move around instead of the AWSD keys, I'm a happy camper. Other than that, the control were really simple and intuitive.
Would have been nice to see more variety in powerups, but, given the length of the game I think the amount that are in there are certainly enough - although, the missles and flamethrower seemed kind of worthless in my opinion - but you need stuff like that keep people on their toes and thinking strategically. Also, a secondary attack of some type might have been nice - such as a grenade blast that damages everything on the screen - through probably in this game, that would have made things too easy - but in a game with longer levels it's something to consider including.
What really impressed me was the AI of the first boss. There was a definite pattern - and once you learn it, he's beatable - but even if you go in knowing what to expect, you can still get your ass handed to you if you aren't paying attention, which is good because it keeps me as a player from feeling passive about the game and it shows that the game really is challenging and solidly made and is not just about learning the "tricks" to beating it.
As almost everyone else has said, more and longer levels would have been nice, and this type of game is perfect for platorming action. But I actually appreciate the length of the game as it is now - it's just long enough to be an entertaining and challenging mini-game that you can play when you have a few spare minutes, which I assume was the intention given the Author's Comments. And I'd much rather play a short, well thought out and polished game than one that's a little longer, but possibly rushed in places, and so in the end not as good as it could have been.
Really there's nothing negative to say about the game - any complaints I could think of would just be minor nitpicks - and this is certainly a game that's worthy to bear the Pico mantle.
It would be great to see more of these types of games later in the year - you certainly have my support in releasing them, for whatever that's worth to you.
So yeah, thanks for a really excellent submission - I wish that more flash games were as well executed as this one.