Nice demo!
A compact download, and it's not too shabby of a game, putting aside the fact it's a demo.
I know it's a 1942/1943 ripoff, but hey. This isn't a bad emulation or... er... thing of it.
I would suggest trying to make your own 16-bit eraish sprites, just to make this game as original as you can get it. The powerups ought to be done in sprites too, they seem slightly out of place as flash circles (though I'm guessing you already have planned to change this).
I'd also like to see some more powerups if possible.
Overall, nice demo! Keep crackin'!