Genre crossovers! Huzzah!
Wow! This is really great! I was expecting to not like it when I first switched it on, as I've been growing more and more tired of all the block puzzle clones, but you really did something unique here. I like the idea of drilling around through the blocks (rather than the usual swap-and-match-three rigamarole). It's also fun the way you are eliminating blocks to try and bring two tiles on the grid together (hero and key, hero and door) rather than just trying to eliminate tiles. It provides an actual objective to eliminating the blocks. Plus the extra items you can pick up feel sort of like side-questing, which is fun.
The monster encounters are really well designed, too. You can actually fight with them, but fighting with them also requires puzzle-solving.
In my opinion, the game you've create is a better crossover puzzle game than puzzle quest. This is really interesting stuff!
If I were to make one request, I would ask for some sort of in-game tutorial. It's okay going to a different site with an instructional video, but it would be much more handy to have everything right there in game.
Adding this to my favorites. I'll keep playing it, and I'll keep the sequel in line as well. Kudos on a job well done.