A huge (and honest) review for a huge level!
I've played through to the good ending, but, I was expecting a battle, and there wasn't one, which left me a bit psyched up and unsatisfied.
I'd say the level is really a mixed bag, it has some great stuff, and some not so great stuff, IMO. I personally find realistic backgrounds cheesy (ineffective) against Knytt style graphics, and a lot of the sky textures seemed inappropriate, but these are matters of taste.
Also, Frozen Mountin herself didn't seem to play a prominent enough role for me. The game could just as easily have been called "Juni's Random Adventures".
Now, you DO have a unique tiling style, which is very collage-like and itty-bitty, and I really like that when you pull it off well. In some places, though, it just seemed like bad tiling and/or layering, creating very little depth and/or immersion. This was also the case in FM1 - the unique style is beautiful when it works, but often it doesn't, and falls flat on it's face, for me at least. In some areas there was a tad too much going on, though overall I like busy screens.
The CO usage was nice, but some of the COs felt out of place. The spinning arrows for example seemed very corny and 'multimedia 2.0', like something out of a bad Powerpoint presentation. To me Knytt is about cool and heavily stylized pixel art, and those arrows almost stand for the opposite of that. There were some other photo-realistic or generally unfitting custom objects that I didn't like, but I DID like some of the others, particularly the foliage (although again, there were layering problems here and there).
Another thing was that I was confused by my powerups disappearing and re-appearing seemingly at random sometimes - more care could have been taken to remind the player of what was going on - perhaps a cutscene or dialog sign reporting the loss. I think this happened a couple of times, but continuity isn't always smooth in this level.
On the plus side - I enjoyed a lot of the gameplay, with difficulty which was just right to be challenging, but not frustrating. I also enjoyed the sheer size and it's obvious a lot of work has gone into the level, and this helps to create immersion. The minigames were fun, and the dialog was very decent for someone whom English isn't their first language, and I felt it added to the game world. For example, the lantern part was nice because we're introduced to customs of the game world, again pulling us in. There are also a lot of areas with very immersive ambience, despite my complaints, and a lot of beautiful moments.
Like the original FM, this is a level I will come back to every now and then, so replay value is high for me. Definitely a very good level all things considered, but far from being one of the best for me (in fact, I think I preferred FM1, but that may be a nostalgia thing as it was one of the first KS levels I played). It would be nice to see you stick around, as I believe your style has yet to mature, but as it is you're going to leave a sizable legacy with these two games! Congrats