Excellent hack! I just tried it out, and it's truly awesome! I have some issues and suggestions though.
First of all, I'm using Gambatte in Retroarch, and when I used the pipe in Turtle Zone 2 to access the secret exit, I got a bit of graphical corruption:
It may just be the emulator, but I'm not sure.
I also have some graphical and palette suggestions. For starters, I feel Luigi's left/right facing map screen sprite is a tad doofy, because his nose looks a bit big, like a large smile. I feel shifting the mustache inward and adding a pixel to the sideburn makes it much better:
Also, on the topic of the map, I feel the grass is a bit too drab, and on an actual GBC screen (emulated via Gambatte's "color correction", which is pretty accurate) the grass looks very brown and dead. On a TV or monitor it looks okay (though still a little drab for a Mario game), but I feel that saturating it and making it more green tinted makes it look best in all scenarios:
GBC colors emulated:
I also noticed that Mario's sprite on the map when facing the screen is missing his overall buttons. Whether it's in the original or not, adding them in would be a good thing.
I have some suggestions for Luigi's sprites as well. To begin with, I've noticed that big/Super Luigi shares the same body tiles with Mario:
It looks very off to me, because Luigi should be much thinner, and the fat body looks strange with his thin head.
I made an incomplete, quick set of custom sprites, based on the GBA versions of World and 3 and tweaked to be in the style of Land 2, just as an example of how I feel Luigi should look in this game:
I've also tweaked his palette, because I think the shades of green and blue would be a tad too similar on an actual Game Boy screen. I saturated the green, and darkened the blue (and also slightly tinted it purple, like in World). I also saturated Mario's red and Blues for consistency, and just to stand out a touch more. I feel that their fire palettes are already perfect:
I would have made Luigi's stance a bit more like Mario's but since he's thinner, I couldn't get it to look right, so his standing sprite is pretty much his GBA SMA2's sprite, but with a tweaked hat. Another way to go could possibly also be to just color reduce his All-Stars+World sprites, since even in that game he had a very different style of animations to Mario, which was one of the coolest instances of characterizing him through his animations.
I'm not sure if Luigi shares Mario's lower sprites due to a lack of space or RAM, but in that case it'd probably be better to have him share Mario's small sprites instead, and have entirely unique big tiles. I'm also uncertain if you'd planned on renovating his sprites later on anyway, in which case I've just made a fool out of myself.
Also, as for gameplay, I feel that Luigi is significantly overpowered. He seems to both run faster (I outran those fly enemies that fly away from Mario when he gets close) and jumps higher than Mario, with no downsides. It'd be fairer to implement his slippery turning and deceleration from Japanese 2/Lost Levels, or perhaps make him run a bit slower than Mario if the game's programming makes the former impossible, because as he is, he makes an already easy game even easier* and it would be more interesting to play as him if his bonuses came with some downsides to balance him out and make him unique from Mario, rather than just being better in every single way.
*(on that note, how about a "hard" mode, maybe in place of the "easy" mode which makes the damage work like SMB1 and World, where you always revert to small when hit? I'm not at all expecting you to implement this, it's rather an on-the-spot suggestion.)