Good Game, Lacks sparkly things
The gameplay part of the game (the part that really matters) is all there. It handles well, it progresses nicely, and it requires a bit of thinking. If I were going to improve the game, I would get rid of the lives system right out and have the level automatically restart upon death, much like it already does (just without a limitation.) The only real point of a live system was a method to get people to keep putting quarters into the arcade machine, and since that's neither here nor there, there's really no need for it. The level password system is okay, but if you can figure out how to get the game to save your progress through a cookie that would be better.
Beyond that, you could spruce up the graphics, and adding in some fitting music would definitely help out. Just make sure you add in more than one track, or our bleeding ears will hate you for it.
You have the core mechanics of the game figured out, and that's the first most important step. Anything else you add would just make the game all the more enjoyable.