In one of the shots where Mario is leaping away from Holly Mackerel and passes, Toad, the princess, and Luigi, Toad's bare arms are showing as he's wearing a frog suit.
Hip and Hop spot, Luigi, the princess, and Toad approaching the Doom Sub. In the shot where Koopa orders to fire the "Nasty Nets," Hop's hair is pink.
If the merpeople need water to breathe, why would they have a glass dome to keep water out and wear helmets filled with water?