I originally added the blood falls to try and give the level a more "devastated" feel, although I agree with you about the fact that they do look a little strange with this tileset. These ones are only temporary until I make some new ones from scratch, and/or edit the palette. I'll also probably use them in the sewers only.

About the city palette, I intentionally made the palette look dull as it supports the atomsphere. I might change this though.

EDIT: Better?