Beautiful sprites, very cool idea! I agree with the idea that the gap should be wider, and maybe it would be a good idea if all bullets could be deflected (but with a cooldown or a harder window to parry?)
Anyways pretty fun game! I managed to cheese the level part by dashing offscreen haha (just go to the edge of the screen and dash to the right). That doesn't work with the boss though, so I had to fight it normally.