Angelus to the rescue!
I love the concept. I ran into a couple miscellaneous problems, though. Some of your water was death pits, others were not. And if you plan to keep the ones that aren't, I'd suggest adding an escape route for sonic, who can't fly or climb out.
There were also some invisible wall issues, the main one being I got stuck behind one. Make sure they're tall enough for that not to happen.
The ways you used to switch up the Y plane were nifty, kind of like SonicMaster's Cosmic Angel. And in general I like the 2D levels anyway, but this one and Nathan's Sand Valley are my 2 favorite.
EDIT: When I say "this one", I mean Cosmic Angel.
Future suggestions:
This one applies to the co-op part mainly. see if you can make it to where the players' progress is dependent on one another. You know, like switches to trigger bridges, conveyor belts, etc. That's just my idea, if you can, take it and run with it.
Overall 8/10
Like I said the concepts are good, and other than a few miscellaneous errors here and there (some of them I would rather not have to go into detail about because of how long it would take me to explain). Just fix those up and toss in anything else you can think of.