This project is shaping up fantastically. The game has a well developed atmosphere. It makes me want to explore. I love the style of your art and animation, especially your color choices. There is clearly a lot of placeholder art, but looking past that I can see you're on track. Just do everything you can to sustain that atmosphere.
One concern I have, is that the action elements (fighting enemies), undermine the atmosphere of the game. I was feeling a sense of adventure, but then when a fly started buzzing around my face and I had to slowly chip away his health, that was lost. It felt annoying. To me, this game's ideal form is actually about that sense of exploration. I honestly think that with care put into the movement mechanics (like the grappling hook), you don't need a bunch of flys and pigs running around. Boss fights could be an interesting punctuation to vary the gameplay.
Keep up the good work though. You have something with very high potential here.