This is really awesome! Did not expect a 3310 beat em up. Would be nice if the enemy lifebars appeared on the right when currently engaged.
Yes, I was thinking that, similar to how streets of rage did it. The life bar of the current/last engaged enemy appears, only one life bar at a time. In this case, I was thinking on the lower right, and not above the enemy heads. To reduce confusion and clutter, you can probably make the width of the enemy smaller too (if you decide to implement the life bar).