The coloring is really flat, but the positioning of the shadows is great! Just let a little bit of the materials color shine through and tint the yellow lighting. Also if the whole house across the way is on fire, the shadows should start sharp but fuzz out quickly as you move away because of how broad the light source is.
I love the colors and the scene you built!
The strong, focused, lighting on the ground does not make sense though. If the squares of light around the stone lamp disapated outwards instead of coming to a hard line, unless each window was pointed almost straight down to get such a hard top edge. Under the paper lantern, kinda the same deal, would love to see just a more gradual transition from closer to directly below the lantern.
All that said, this getting really fussy about a nearly perfect diorama that is well above my skill with a brush. You ROCK!!!
Great diorama! Not sure where the blue light is coming from, and it would be nice to see the shadow othe katana on her body as well from the strong spotlight.