Quite Impressive :)
I thought this was done by Adam Philips at first. A lot of it is the signature of classic animation, which is what he does. The water effects and such were done superbly, and it was difficult to tell what was tweened and what was done frame by frame. To me, that's the signature of a good animation.
As previously stated by others, the music is very very catchy, and fit the "spirit" of the animation very well. It was a lot of fun.
I think, frankly, you have found a little tiny niche market near the Brackenwood series. While Bitey and all his friends are more an adult oriented fantasy land, yours is more children oriented, but just as intriguing. I like that a lot.
I think if you take the time to flesh out your characters in a flash that's a bit longer (I understand the 3 minute time constraint, and you performed admirably), you could have something just as popular and have people clamouring for more.
As I said, I'm impressed with the effort put forth. The only point I knocked off was because the storyline was a tiny bit shaky, but that was to be expected.
I look forward to the next one, if there will be one.