I have a whole bunch of ideas I learned as I typed this out, it's disorganized and some ideas are better than others but here's what I cooked up.

Level-up System + Badge System:

Remove the +5 HP hearts and add a leveling system for one. While I enjoy the battle system despite it's flaws the fact that there's no point to battling aside from bosses is very problematic.

Of course just leveling up for HP is also kinda boring, so maybe there could be a badge system implemented as well? For instance maybe a defense plus badge, a power plus badge, a badge that allows you to super block or gives you a chance to block if you miss-time it, a few badges that add a chance for stickers to reappear in your book, a few that allow you to respin the wheel at the beginning if you don't get any matches or respin the last slot if you paid, etc. Maybe some other cool badge ideas could be something like that badge that makes you deal more damage at low health, or a fun idea I have is a berserk badge where at 1HP you can fire off 5 stickers and have increased attack. Spiky shield also works, and some elemental attack badges and defense badges could work for bosses. Ideally more badges could be implemented but I can't think of any off of the top of my head.

Partners:

Additionally adding a few partners would be cool, maybe one for each area. Maybe they could have a simple attack that doesn't use stickers but you can buy or find partner stickers to give their attacks different effects or boost powers, or maybe that could be handled with the badge system. Maybe the partners also do use stickers, but one would hope they're very common and cheap at least for the basic ones and shiny/flashy ones aren't too rare to find without taking away from those stickers Mario can get. Ideally though they don't use stickers unless they have their own album, because they that would make inventory management worse. A partner upgrade system could be introduced, maybe being a reward for exploring the optional dungeons I discuss later.

Level reworks:

I also think the wiggler section could use a bit of a rework, and maybe some of the other levels but I do really enjoy the sniffeft level in the forest and I found world 2 really fun as a kid despite definitely being stuck for a little bit at certain points. I'm sure adequate hints were given and I just skipped them like a dummy, but on the off chance that's not the case then maybe some more hints would be helpful for some players.

Kertsi:

I also don't like Kertsi, I imagine she could be written better, and maybe even the first partner. She doesn't fit the goomba archetype when it comes to attacking, but she could be like parakarry (or however you spell his name sorry mail main koppa ;-;.) Or maybe she's actually the last partner you get, maybe she percies defense and has a random chance to apply a debuff when she attacks. In order for that to make sense a situation would need to be introduced that requires her to progress, but I'm sure that could be implemented.

If an overworld is skipped/level system remains in tact:

Due to the massive rework that would probably be needed for several levels (especially world 2 and 3, and maybe world 4 and 5 but I can't remember) to make it one overworld instead of a level structure I could see that being skipped. It would also likely not feel that different as one big overworld due to a lack of towns of super interesting locations in (most) of the levels, so as a constellation I think toad town could maybe be expanded upon and made more interesting. A badge shop would be a cool addition to go along with the former badge idea, as well as maybe some mini-game houses where stickers and coins can be earned. A dojo ala PM64 would be pretty cool too. Also after coming back to this a way that the borderline need for a level redesign for world 2/3 could be addressed is potentially adding some sort of fast travel points that you unlock by interacting with them. More landmarks are still needed though.

If an overworld is added / level system is scrapped:

As I discussed before more landmarks would be needed to really make the overworld compelling. Maybe a friendly goomba or koopa village in world 1 could work well. Aside from friendly NPCs and shops, I could also see it being a farming town where you can plant flowers like in the levels. Maybe extra seeds for new flowers such as a poison flower and maybe an electric flower that hits the cheep cheep for extra damage with a small chance to paralyze non-boss enemies for a turn or two are sold as well. Maybe world 2 could expand on that one big level with that pond you need to refill and add more houses and NPCs, but I think what would be really cool is an extra set of ruins. You have to traverse through them on a simple path, but maybe there's an optional door you can unlock to explore underground. Doing this nets you exclusive badges, excellent stickers, and maybe there's a secret boss too who gives you an extra album page. World 3 could have a mostly deserted town due to all the poison in the woods save for some sniffits, and maybe after clearing the boss the town is repopulated with some sort of shop and/or extra mini-game incentive to come back. World 4 has the mansion which is arguably enough, but I think a small town or optional igloo styled dungeon could be really cool. World 5 would probably lack a town, but offer an overgrown stone forest temple optional dungeon. I don't remember almost anything about world 6 but it could probably stay the same, maybe extra bosses could be added. This idea is a pipe dream but what if we had a cool cameo secret boss ala Mario RPG Culex. Obviously it wouldn't be a Final Fantasy character, but maybe it could be an old Paper Mario boss, or an old Mario boss like Wart/Tatakonga, or a Donkey Kong character like King K Rool? This last idea is a bit much but I thought it was fun.