This is a super cool game, and I really dig the layout and the way it reinforces the aesthetic. The mechanical engine itself seems solid too, and I didn't spot any spelling errors or points where I was confused while reading through.
A few things struck me while reading through, though, and I wanted to jot them down for the sake of providing feedback.
To be clear, this is just in the hopes that this stuff is useful. I have a heck of a time getting feedback on my own stuff, so I try to offer it when I can.
Anyways, the first thing that stood out to me was that the game feels very introspective and internal. The big dramatic conflicts are sort of just going on in the metaphor-scape of the PCs' heads, and then reality reasserts itself afterwards. This sort of pulls the bite from them, at least for me, and I think it puts pressure on the 'real world' plotline to carry narrative tension in the story, with the fantasy elements being more (sometimes literal) flights of fancy.
Second, the ashcan doesn't feel like it provides enough of a sense of what a compelling scenario would look like. A demo scenario or some hooks might help a ton in giving GMs a sense of what kind of stories will engage the PCs.
Neither of these things is bad, and I may not be the target demo since I had trouble getting into FLCL, but I read through a lot of the book with a strong "I'm not sure how I'd run this" feeling.
My first instinct was to do it as Tales From The Loop or Persona, but in both those settings the fantasy elements are (at least semi-) real.
At the end of the day, I think I'd end up trying to do it as more of a Bridge To Terabithia, and I'm not sure if that's intended.