I have been playing you game now and the fact is that your "somewhat silly game" has been amusing me for the last 10 minutes.
I would really love to see this finished because as i have sead before this shows so much more potential.
Btw
i can make some 8-bit sprites if you want i have to say I'm quite exited to be part of this, if it is possible for you of course.
I would like to suggest some things if you don't mind.
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Use different sounds for stuff:the beep noise fits in well,but other sounds would make the game even better.
http://www.findsounds.com/ISAPI/search.dll This website has some intresting sounds files AIFF,AU,MP3,WAVE files.
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elevation:Terrain elevation would fit in well, if this is possible i would really support this. for instance. a cliff where you should build a bridge to get to the other side.
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AI:You have thought about this as well i see but I'd like to give my idea about it. You can use your gained villagers to ;Farm,fish,mine,cut trees,
explore! last one should be a bit difficult but i think you would be able to handle it.
You will hear from me again. ;)