Very nice! I think you should definitely keep the health bars. The pose of Ryu and Ken are a bit stiff, though, maybe you could try getting one of them to uppercut the other?
Ken's hairpiece looks a bit odd, do you have any Luke Skywalkers? I've made a few street fighters myself so I've been trying to get the looks down. I don't have them handy at the moment but I do have some experimental photos on my camera's memory disk. Apologies for the terrible quality, these were never meant to be displayed but they're all I have. And I'm certainly not trying to take over the thread, these are just how I've been doing it.
Ryu's head is from Exo-Force, while his hair is the fairly common modern type from sets like Small Car
. His torso's also from Exo-Force but I may replace it with the karate champ from Collectible Minifigures 2. I don't own any red hand parts but I'd use them if I did.
Ken's torso is a girl's top
, but it's the best I have. The boobs fortunately aren't too prominent but I need to use the flames to hide all the ribbons
And unlike you, I don't even have a plain red top I could use. The head is from a different Exo-Force guy.
Just to show they're not all from Exo-Force. Chun Li's mainly from Castle.
Overall that's a fantastically colourful little MOC. Have you thought about printing out the health bars to display above it? I wouldn't build them from bricks, if they're printed they'll look more like part of the "screen," just like in this photo.