A really fun idea and the setup to the 3D version of the game was neatly done.
I'm not sure how to survive in the main part of the game, I had a terrible time trying to avoid the enemy shots, generally I'd get to one health restore power up and not make it further than that. From what I could tell that was about one fourth of the way through the level.
A 'skip' ability once you've been immersed into the game already would be nice, since what you do on the 2D cabinet doesn't appear to affect anything in the 3D version. Making it have an effect and switching between the two modes is an idea, but in a game jam time frame I wouldn't have suggested going for it. :D