Updated to 0.97. The experience system has finally been added. 
Hold Start when choosing Leo to enable it. Bear in mind it may need tweaking for your current Mugen setup. For example, if you have really powerful bosses, you might want to raise the Attack and Defence bonuses to 0.02 (2%) per level.
AI's been given bit of an overhaul. It should use a greater variety of attacks and seem a bit less robotic, if all goes well.
Please do mention anything that may be a bug... I tried to do some extra testing, but there may still be a few hiccups that were missed.
Violin Ken: How about having this new Rush attack have some kind of autoguard, using the shield for defence instead of attack (what a novel idea 
)? Something like, hold back for 1 sec then forward + punch or kick, punch makes him guard his body, kick guards his legs. When he's close enough to the enemy (or at the end of the dash), he'll do his crouching hard punch. IIRC, such attacks don't appear very often in fighting games... is it an ok concept? Sorry for the late reply, btw.
ATM, I'm also considering what the weapon specific moves will be. They'll all be performed using QCB + X/Y/Z. Current ideas:
Spoiler, click to toggle visibilty
Normal Swords: Hopping attacks with some startup invincibility. X (jump C->jump A) goes backwards and slashes twice, Y (edit of jump down+C) is a quick overhead knockdown, Z (edit of standing Z) goes forwards and may be comboed from with Hercules Rush. A bit of everything; evasion, mixup, and distance-closing.
Fire Sword: Hanzo's (Samurai Shodown) ground fireball. Leo twirls his sword above his head (edited from crouch A), knocking away the opponent for minor damage if they're jumping in, and then stabs the ground to release it. Good for getting some breathing space. X button has a quick motion and quick, but short-ranged projectile. Z has a slower motion, but a projectile that stays on screen for a couple of seconds. Y is in between.
Ice Sword: Leo points his sword skyward (jump up+Y), shooting a stream of cold, which solidifies in mid air and drops an icicle straight down. The stream itself can hit and freeze for minor damage. The icicle cannot be guarded crouching, and Leo can recover before it connects. However, the icicle will dissappear if Leo is hit, and will be quite easy to dodge on its own. Good against turtlers; if they don't try to evade or take initiative, the icicle + a low attack is essentially unblockable. Button pressed determines when the stream solidifies, and the damage of the icicle.
Thunder Sword: Leo charges up energy in his sword for as long as Punch is held. When released, he goes into a very fast dash attack that's invincible for the split second it's in motion. The longer punch is held, the higher the damage and the shorter the recovery. At max charge it will instantly guard crush and leave the victim comboable. Startup time is moderate to very long, depending on input. Button pressed determines distance travelled.
Axe: Leo hops and strikes the ground with the axe (edit of standing X and jumping down+Y). Knocks down a standing opponent for minor damage (like Goro Daimon's ground slam, but not as damaging), and negates nearby ground-based projectiles if timed properly. It'll be quite fast, so can be used to make openings for offense.
