Not bad, needs work.
You're almost there with this game, but it needs some work. Collision detection isn't consistent with what the graphics are showing the player.
That, combined with the way that the characters pop back up to their original positions means that the game is either really easy (the AI can't hit you but you can hit them) or impossibly hard (you get hit, fall down, and pop right back to the spot where you were hit, get hit again, repeat until dead).
I like the music. Is the brawl music from Donkey Kong? The animations are pretty cool. The game is fun for a while but gets quickly boring or frustrating because of what I mentioned above.