The bad reviews are just unappreciation of TALENT!
The animation style is impressive and phenomenal! Because you took such creative license to each character's designs, you could easily get away with adding this to your portfolio, and rake in some professional work.
It was an epic super-hero comic sprung to life. Bowser looks imposing and threatening, and by increasing his size to an almost Godzilla magnitude made the fight that much more interesting to watch.
There were many uses of gradients in this, and not a one of them were bad. The best use, in my opinion, was Bowser's blackened face to red mane. As we're accustomed to Bowser's face abundant with features, the black void starting from his snout to all around his face adds emphasis to his whitened eyes...definitely one of the coolest versions of Bowser I've seen. Instead of fireballs, he shoots particle beams, for Christ's sake. How can anyone not love it?
Luigi has had quite a bit of justice done to his design as well. From just a background, under appreciated side-kick in the past, risen to almost offensively gay in recent years (cite: Luigi's Mansion, Super Smash Bros. Brawl), but the image you've depicted is redeemable for him. He contrasts with Mario completely, and you've given him an incredible amount of character, all without using any dialogue whatsoever...which, in itself, is an impressive feat. The pointy ears wasn't a trait that I outright loved, but I can deal with it.
Mario went from fat to ripped badass, and it totally works! The mushroom tattoo was a great touch, and he ditched the overalls for bare-chest brawling like a MAN. The facial hair for both characters was well-chosen, though I personally would've kept some form of mustache thicker than what was chosen, to truly pay homage to Mario's trademark man-stache. The detail never stole my attention away from the fight, I'm just nit-picking.
Toad was designed well, and through his body language, has a character that parallels closer with the content they're based on than any of the other characters in the animation. Still, he's noticeably different, and serves as a compitent, and necessary assist in the fight.
Peach, in my eyes, is, and always has been a bitch. Sure, the first time she was a damsel in distress, and may have genuinely needed saving, but when it happens time after time after time, you begin to suspect that she either gets something out of the attention, or is enticed from the fact that Mario has to put up with a tremendous amount of bullshit to save her...or in an even deeper end of the spectrum, sort-of likes it when Bowser bones her against her will. Especially since it's demonstrated that she can fight, and hold her own VERY well in Smash Bros. I laughed out loud when she was cast aside in mid-cling, the slut.
I remember scoping out some of the negative reviews in here, bitching about it ain't Mario, because the "real" Mario uses a hammer instead of a wrench. He's a GODDAMN PLUMBER. The wrench was a good call.
The backgrounds were detailed incredibly well. Gritty with texture, and colorful. In the middle of the fight, it effectively broadcasted the illusion of depth and immersion. Was every single background imported through Photoshop? Combined with intensive frame-by-frame vectors, THAT probably took up a hefty amount in the filesize.
I'm surprised you didn't coordinate with Tom Fulp to see if he could allow you an increased file-size cap for this submission, like what he'll do occasionally for Adam Phillips (Bitey of Brackenwood author.) Then you wouldn't have needed to sacrifice audio quality, preloaders, or credits.
In fact, it's those qualities that keep me from giving you a perfect 10 in the review. Additionally, sound effects could've added a deeper sense of immersion for the audience, and there were many, MANY opportunities to do so. Explosions, stomps, crashes, crumbling, clangs...I could come up with onomatopoeia's all day, but you get the point.
Even voice overs would've been a great addition, but they weren't necessary. I support the absence of dialogue; it let's the audience become international.
Voted 5!