Wow, love the way the combat system works. Truly unlike any flash system I've worked with in the past. As said, the sprites are well drawn, and from what I see, the mechanics encourage a fast paced type of battle, of which I am fond of. Personally, I would include environment boosts, random reinforcements to either side, or other random events to help spice things up. It has potential.
Online RPG's tend to get boring on an average player quickly, so systems such as this and perhaps others including BGM selection (the choice for this demo was quite riveting, great job on that), story writing, and (hopefully) deeper and less stereotypical character profiles would serve well to keep the player glued to the website and away from his or her homework.