Very clever...
This was one very cleverly done flash, and none to short! If anything it was too long, what with the large gaps of blankness and such.
The graphics were, very cool indeed. Solid, and believable. By that I mean you can say "that looks like it could've been in a game".
My only gripes are these: the tweens are visible, and some sprites are overly used. But, that's not a bad thing, neciscarily.
The backgrounds were pretty nice, up until the point at which one was ripped away like paper. That looked hoaky. You should spend a bit of time to edit some of the scenery to make it collapse or sommat.
Still, they weren't bad at all.
Style....hm...I think this was a little slower than it should've been. Some of the scenes needed to be cut short, and some were totally boring. An example being the video footage of lost battles, in which nothing exciting happened.
Though, I do like the clever matchup between Metalman and Magnetman. That worked very well. And the overall effort is shown, that's awesome.
Sound, like you say, cuts short at times, though it still works nicely when it plays.
Violence, though no gore, was very entertaining.
Humor, was somewhat deadpan, and lacked the fart jokes and cursing people demand from a "funny" sprite animation, but funny nonetheless.
Overall, I look forward to the next, hoping it flows quicker now that the tournament reasoning is out of the way, there can just be fighting.
If you improve on my suggestions, and keep working as hard as you did, I think this can be a very wonderful series. Congrats!