You cannot judge this movie by conventional standards. This is not meant to be Roger Rabbit for adults, it is not meant to be Citizen Kane, it is not meant to be Wierd Science. It is meant to be a completely different genre all by itself, and must be judged as such.
This movie scares me. Not in the sense of "it scares me that anyone would make a movie this bad," but more in the Blair Witch Project kind of scary. What it lacks in plot and scripting, it makes up for in atmosphere and creepiness. The "wooden nickels" scene is an example of this; some guy throws a handful of wooden nickels to some innocent kids, and the nickels proceed to open their mouths and devour the unsuspecting children. It's this kind of random, disturbing event that makes Cool World worth watching. This is a wierd movie for when you need to go on a major acid trip but you don't want to actually put drugs into your system. It is the movie to watch when you want to leave all reality and morality behind and think about what could happen if we could interact with cartoon characters in a cartoon world that, unlike the "toontown" of Roger Rabbit, resembles our own world much more closely than we'd like to think.