I dug up an old post I wrote for someone at the old shmupdev forum who was facing a similar problem to yourself, as in they wanted to write a shmup with a more classic feel but were falling into all the bad euroshmup design pitfalls. Hopefuly you'll find this useful, and if you have any questions feel free to shoot them my way, I'm a long time fan of shmups and used to run the shmupdev forum for many years so I've plenty of experience with these things:
Indeed, the term euroshmup doesn't so much describe its area of origin but rather has become linked with certain design and gameplay decisions which are detrimental to the core concepts and mechanics of classic shmup games which make them feel broken as a result. It just so happens that many of these games originated from europe and hence how the phrase was coined.
I dont really intend it to be a dig at your game, but rather just some advice in that you should consider what your target audience is and cater the game to their expectations accordingly. At the moment it seems fairly clear to me that your game is heading down a casual shooter path which wouldn't appeal to genuin fans of the genre but could possibly be entertaining to casual gamers looking for a 60p iphone app to while away a train journey. There's nothing wrong with that if that is what you want but then you should probably commit to that path entirely. If your intention is to try and throw in more features to appeal to classic shmup fans then with your current foundations you will find yourself sat on a fence between both markets and your game likely wont get any recognition from either.
If you do decide that the classic shmup is what you really want to acheive then I really do recommend you do some redesign now before it becomes even harder. One of the biggest pulls for the classic shmup fan is that the game should feel like you are constantly on the edge of being killed and its only your skill keeping you alive, but when death does come it should always feel fair and avoidable with more practice. Having inertia and health/shields really detracts from this feeling since you are no longer in full control and not very often at risk and hence skill doesn't feel to play a large part in the game and isn't rewarded sufficiently.
Cool, I'm glad to see you're taking people's advice on-board. I wouldn't want to discourage you from making the game you want to make though. At the end of the day, unless you're making this game for someone else or to make money, the most important thing is that you make something you enjoy playing yourself. Its just that I've seen similar design decisions made many times before and they've always resulted in games that haven't felt very shmupy (new word?) beyond the fact that you shoot stuff and stuff shoots back, and thus they aren't generaly well received by fans of the genre. If one of your aims is to have your game feel like a classic shmup then its always worth while learning from the short-comings of others and getting in tune with the core ideas and mechanics of the great games.
If it helps, in my mind the great shmups tend to unravel in various layers the more you play them. The first taste you get is like I described before, that the game is challenging and contantly makes you feel on the edge of being killed and only your raw skills and reactions are keeping you alive. These are the moments that have you on the edge of your seat and afraid to blink. Also like I said previously, in order for this just not to be fustrating it also has to feel fair, that you are in complete control and if you die its because you messed up.
The next layer then reveals itself as you gain more experience with the game from replaying it. Sections which you previously felt very difficult, you start to discover routes through the mayhem and methods for tackling the enemies so you can start to successfully navigate those sections repeatedly with little loss of life. This is the reward for your repeated efforts and application of skill and you start to feel a sense of mastery. This is why most shmup games have a largely linear format with fixed level layouts and recongnisable enemy types and formations and their associated bullet patterns. This repeatable nature ensures that you are rewarded for learning the ins and outs of the game since you start to be able to predict and anticipate the action which increases your chances of survival, and previously succussful playthroughs if repeated will work again.
The really great games often feel like puzzles in this respect. You must first brave the carnage relying on your reactions alone and often a safe way to navigate the patterns and enemies isn't immediately obvious. With repeated attempts though you can try to tackle the section in different ways and thus try to puzzle out the safe routes and required maneuvers.
Lastly, after mastery of survival of a certain section or level is acheived comes the scoring layer. This is when the player is encouraged to take more and more risks to improve their scores and prevents already mastered levels from becoming stale too quickly. Its important to get a good risk vs reward scheme in place for this final layer since this will be the final differentiator for competition and self improvement. The scoring is where the real meat and longevity of shmups recides and long time shmup fans often consider this to be the most enjoyable and important aspect, but dont discount the importance of the other foundation layers either.
One of the great things about shmups is that you'll often experience all three layers through-out the course of a single play-through. The earlier levels you've played repeatadly will be all about taking risks and scoring, the furthest level you can reach comfortably will be all about puzzling out routes and enjoying your growing sense of mastery, and the final levels will be a heart thmuping struggle for survival on your skills and reactions alone.
I hope that helps.