Wow, what a great concept! The curtains, audience and stage props totally sell it and make the game memorable. The sprite work is fantastic, all it needs is a few sound effects (maybe some gasps and cheers from the audience) and you'd have a really solid prototype for a great unique fighting game.
I feel like the combat could benefit from giving some kind of feedback to the player when they hurt the enemy, I found myself kind of getting near them, mashing the key and hoping for the best. I also think the enemies on the second level could move towards the player, as I didn't really have any incentive to engage them or use cover.
I really love this idea, it would be great to see you take it further!