I love the idea. I think it's the only sponge-type game I've seen in this jam, and it fits the theme so naturally. You could easily run with this idea further. I think it might be interesting to explore the water as a resource/health system. Instead of letting players shoot indefinitely, maybe give them a set amount of water at checkpoints/hydrants, or maybe let them absorb water from saturated sponges, etc. There's a lot you can do with this!
The style is already quite polished, but some small additions like sound effects/particles/juice would help the feel a lot. I only encountered one small bug where shooting a sponge repeatedly from the same side can cause it to extend past the red barriers that normally stop it from growing further.
Besides that, everything felt great to play, especially the character. I'm sure the game would feel even better on a controller.