I have begun the process of updating my existing TAS so it is time to post some new information in this thread.
Initially I just wanted to get the movie to sync in bizhawk (which it doesn't), but eventually I got into doing live runs. I noticed a couple of things during the live runs that made me think I needed to revisit the TAS and save some frames.
In the process of starting fresh in bizhawk to add improvements I found a couple of other glitches which will result in a much shorter level 1.
First I noticed that if you jump a frame early when hitting the water while on the taun taun you can avoid the instant death of your ride.
Next I found that using the select button while in the air on a taun taun does interesting things. At first it looked like it would allow you to jump off the ice blocks (instead of crushing them), and then I noticed that when falling a longer distance you can use the select button to bump your X position (you are normally locked in to an X position when falling). I believe the physics engine isn't properly escaped when hitting select while in the air, it is attempting to allow you to dismount (which is disallowed in the air), but it screws up some of the detection. The final result I found is that if you hit select while in the air and then jump on the next frame the game is tricked in to letting you jump, this effectively allows you to fly (note that this only works while on the taun taun).
Due to the way this game works this allows for a major sequence break, effectively level 1 is broken. I do still need to go down and get the light saber, but then I can go back up and go over the top of the level. You can also skip the boss because the invisible walls that keep you in the boss fight are triggered by the spawn, so as long as you don't get too close you can just skip past. The final trick for this level is that the ending is based on the X position (positions are calculated from the top left of the map), and going to the beginning of the level (left instead of right) results in an underflow and ends the level.
All of this put together gave me a WIP that has level 1 just under a minute which you can find here:
http://tasvideos.org/userfiles/info/24051503840904190