I see the copyright discussion and I think your defense is more or less correct - but I think it's moot because the better reason to use original art would be that it might be more compelling. This is a nice, solid Progress Quest game, but I've already played WoW's content :(
I think it's really smart to start as simple as this. It's easier to make iterations.
As for the game itself...something i'd explore is giving the player more ways to take calculated risks. It enables the skilled player to get back into the game quickly instead of waiting for it to get hard again.
Side Note: The idea of this website could benefit from some kind of whiteboarding feature or visual annotation.
It's a pretty strong design to start from...congrats. However, I eventually found this game over condition in 36 kills.
!http://sageous.shackspace.com/images/microsiege.jpg!
 "Zombotron"){kind=icon}
 "GrindQuest Beta"){kind=icon}
 "Squid evader"){kind=icon}
 "Micro Siege"){kind=tracking}