Thanks for playing my game! I appreciate the feedback too.
"It'd be good if you could have your shield up if you're holding the button after an attack ends. And also attack even if holding the button to block with a shield (maybe even with a unique attack)." The shield holding up thing is top of my list of changes to make when I get to work again, so that should definitely be fixed by next demo day, as well as potentially attacks that can be done from behind the safety of a shield.
"I think this game would benefit from parries, stunning enemies when you block at the last second, and maybe some sort of action-cancelling action, like if you press the dodge button while not holding any direction you do a quick dodge that can be used by skilled players." Personally I'm not a big fan of parries, simply because it always seemed to me like an OP crutch in Souls games. BUT that doesn't necessarily mean I won't work it in somehow, like with block timing as you suggested, and something as simple as a weapon bounce animation. As for action cancelling, that's actually already a thing! You can dodge to cancel swing recoveries (for the sword at least, probably won't be for all weapons,) and tapping the dodge button makes you dodge backwards if you're not moving in any direction.
"It's fine to have a permanent damage system to avoid potion-spam face-tanking, but please don't let players use their potions if their life is as high as it can go with them." Not a bad idea. I was thinking of making it so each potion can be sipped for a specific amount of health, leaving the rest of the potion available. I might do that.
"I don't want to make too many points on the art, as it's WIP, but I think the menus need some work as to not be as confusing, damage numbers should be colored to differentiate between your and the enemies' damage, and also consider zooming things in, as your animation system and gameplay would benefit a lot from larger character sprites. The controller on the side also seems unnecessary, unless it's only for testing purposes, you'd be better off with a handy button guide." Yeah menus have been tricky to figure out. I'm not even 100% sure I'm going to have damage values flying off characters in the end. As for the character size, I'm not 100% sure. I was thinking of making them 32 by 32, but I like how much space they have to move around on screen right now. Things might change. And yeah, the controller is for testing purposes.
"Also, game doesn't pause while on the menu. This is fine if intentional, but you have to show at least a bit of the screen if so." Not at all a bad idea. I don't know yet if I'm going to implement pausing. Most likely, at least for single player.