Turambar. Revertable Fairy spell would definitely be a cool upgrade. That is, assuming I will keep the spell as is, because it's possible to it will be replaced by something else. I'm still pondering about the idea. Also, I agree that the idea of having an empty area when you're hit by a Demon on a Road tile is kind of pointless. Having Demons disappear on touch when on a Road tile would be trivial in terms of programming. Alternatively, I could make roads populated by enemies, but easier ones.
About the tunics, I like the general idea, following from other Zelda games of the series, but something makes me hesitate. At some point, I'd like to have enemies of different colors. I know it's important to have color codes in a game. In Zelda II, colors are supposed to provide a hint on the enemy's toughness. Goriyas and Ironknuckles are good example of that, with 3 different "skill levels" of the same enemy. So, making enemies different colors would break that code. That's a point against. My point is that it would certainly add more variety to the game, and give the player a feeling that they really are in another region of the world. That said, if I change Link's tunic to any other palette, he will turn different colors depending on where he is on the global map, and it may feel weird or confusing to the player. A good tradeoff would be to keep the current color coding, or to have another one, but constant, and make slight variations along the way. For example, Blue enemies could be a little lighter in some places, and more towards purple in others.
Here's my thoughts on new weapons, like boomerangs, bombs, or any other things that already exist and could be upgraded. Unfortunately, I will have to be sparse with new things that may take a lot of coding and introduce new visuals to the game. The main reason is lag. Zelda II has quite a lot of intricate details about combat, and that's what makes it exciting and challenging. But that comes with the price of lots of CPU cycles. In the original game, having 2 or 3 enemies with projectiles on the screen at the same time will produce noticeable lag. Every frame, the engine must do a lot of things, and adding new things, while possible, increases the possibiliy of causing lag with several sprites on screen. Every frame, the engine must process quite a lot of things: Link's sprite and movements, update experience and both meters, update the HUD, check for collision with tiles, check for sword hits, process all enemies, process projectiles, apply spells, change palettes, apply scrolling, play music and sounds. And more.
That said, I will upgrade things and add new stuff, but it will be limited. If new stuff causes lag, I'll make the sacrifice, because lag is a deal breaker. The silver lining in all that is, no matter what, having too many enemies on the screen at the same time, especially ones with projectiles, can quickly become unfair, so it's something I will balance anyway through level design. There will be special moves that you can learn, and I'll probably settle for Up+B as an alternate attack command.
As for upgrades and experience, I like the idea of having different swords, but also be able to upgrade them with experience points. I think I'll leave the stats to 8-8-8, since increasing it to another number, like 16, would be more hassle than it's worth, in my opinion.