Interesting Concept - Tremendous Potential
Great job, AF. Reminds me the video-gun games they used to have back in some of the old arcades where they would stand you in front of a rear projection screen and play laserdisc clips of cowboys shooting at you.
Especially innovative boss fight - quite impressive.
Possible future directions (I'm not sure if it's possible in the medium you're working in):
1. A branching tree structure where the player makes decisions about which way to go by clicking arrows on the screen. A lot more work on your end, but it jacks replayability up. (What if I went left at the first crosswalk? What if I decided not to go up the stairs? Etc.)
2. Enemies that are responsive to where they are hit. A different animation if the 'killing click' is on the head versus the arm, hand, torso, or a leg. You could put as much or as little work into this as you want.
3. As someone else has mentioned, ammunition bars, reload animatons, and possibly different weapons and/or powerups. (Body armor seems as though it would be easy to do.)
I'll also agree with the sentiment about dropping the health down lower on the baddies.
Overall, great job. I think you could potentially resurrect an old genre and take it in a whole new direction if you put enough effort into it.