Yeah, your definately making progress in the right direction (except the demon, I think you are right, maybe its just the background but he is unreadable atm).
I have to say that I LOVE the sleeping dwarfs, they are super funny. I also really like the reduced complexity on the dwarfs in general now, and am happy that you stuck with the red noses and ears - thats really giving them something. Even though I know this is a artist trick to make ears and noses red, I'd not use the same intensitiy on the elves, that just seems a bit too much.
You are right about the grass, it really has a nice fluffy feel to it compared to the rocktiles.
I'm not sure if I like your update on the purple enemies - From your last WIP I was able to imagine how you'd animate them, but now with those more massive "tails" you'll have much harder time imho.
Keep going and don't let some stupid crunchtime suck all the power out of you.