If you save all the hostages in all the levels, I think you may get a weapon upgrade (laser) against the final boss, Mr. Mimi. Or, at least, that's what happened when I just did a (victorious!) playthrough on real hardware: I unexpectedly got a laser against Mr. Mimi, and that's the only reasonable explanation I can think of for why.
(There's a claim
here that you get the upgrade if you beat Minosaur without dying, and that you get fireballs if you used lasers and vice versa. But that's obviously not true based on the TAS -- and on my winning playthrough of the game, I lost a life or two against Minosaur and had to finish him off with my regular weapon, but still got a laser vs. Mr. Mimi.)
If my theory is correct, it probably wouldn't save enough time to improve the TAS, but is it worth looking into? There are only a handful of skippable hostages early in the game -- the rest are already required, I believe.