Couple things ...
For the people talking about Nintendo not letting this continue, you never know until you try. Obviously, this can never be released as some big app on the marketplace, especially for money, but it can always operate in the way it does now. Nintendo may or may not take issue, depending on their plans. It's a franchise that's ongoing, so it's possible they may take issue.
However - the person who used the word "lawsuit," needs to seriously think twice before using such language. You might terrify someone! :] A lawsuit is not what would happen. It would be a very simple cease and desist request, unless the creator made in excess of $5000 on the game (less too, but five grand is generally what it takes for any legal precedent to get noticed, though if it's for sale at all, some legal action may be taken)
So in short - should be OK to keep working on it, don't make a bunch of money off it, and don't be surprised if you get a letter threatening legal action.
Second thing I wanted to note ... EmprtArea is an enormous tool. :]