Loved the concept, and the fact that it's 3D, good job! I liked the animation on the houses when you damage them, nice touch. In my opinion a minor, but great improvement would be to have some kind of indication when the villagers shoot at you.
I did the house effects in no time with simple animation keys for rotation, script code to make it sink as it loses "health", and also reused the smoke particles for the dirt.
Agreed with the indication, I planned to make an animation but ran out of time.
