Lylian: Episode 2... or is it? A debate on things to come

Too early for a post mortem, this is more of an initial reflection of how Lylian episode 1has gone after release. And how it will effect future games created within the Lylian world.

It's Feb 2011, Episode 1 of Lylian has been out for a few months now. Distributing directly from the game's site, GamersGate, GameArena and soon Direct2Drive. It can even be played in French, German and Spanish thanks to a few awesome volunteers.
 Support from the community has been great with Twitter, Facebook and the Mailing list as well as being published in various printed magazines and lots of great online sites. Yet sales have been less than hoped for, so far nowhere near making any profit.
I was hoping to use the income from episode 1 to part fund episode 2. But that hasn't worked out and I'm doing extra freelance work to earn the cash. Which means development is slow again.
I only have myself to blame for the slow sales, of course. I tried a business model that offered a short gaming experience for a low price where people would prefer to pay a great deal more for a longer, more complete experience.

Episodic was chosen for a few reasons. As I developed the majority of the game on my own it would be at least 2 more years if I were to release the game as one whole experience. I believed I would need a break (and I so need one). Also, I wanted feedback from players to improve future episodes.

I got plenty of feedback! All of the feedback has been great whether from reviewers or players they've all been encouraging and invaluable. The story, ambiance and idea seems to be the winning factors. But the combat and genre let the game down to a degree and perhaps made it a little to niche.

Episode 2. I've been working on its current form for a while now, but I'm going to scrap it. Even though it has improved on the game-play; less combat, more puzzles. It's still the same graphics and limitations. It's still a side-scolling platformer that is choking the story. The previous game has had good reviews, but I want it to be so much better!
Currently, a story and dialogue is written up but I need to decide on the game platform. Adventure point'n'click? Third person action? Puzzle? Pixel art or 3d? These are what I'm trying to work out.
 I'd like to ask what people would like to play, how would you envision Lylian best being played. Tell me some names of games as reference.
I'm considering making each episode a different genre, but have also considered removing the episodic aspect and creating a "full story" - one large game.

At the moment I'm taking a little break off Lylian while I decide on its future transformation. I'm making a little free to play Flash game with a very small development time, and loving it. 

Please feel free to share your constructive thoughts, I'd really appreciate it. And, if you haven't bought the game yet, please feel free to do that also, it's worth the experience I've been told!