(reposted with some revisions from Youtube)
Hopefully I can clear a few things up for you.
The dinosaurs know of our world because their society was once ruled by the "Portal-Keepers," a secret society of dinosaurs mutated by the meteorite's radiation. Their job was to guard the meteorite and protect the stability of the dimensions, often crossing over to study us.
After the King denied Koopa's plan to merge and invade our worlds to solve the issue of their dying planet he staged a military coup, deposing the King and slaughtering all of the Portal-Keepers other than Daisy's mother due to his love for her. Daisy's mother escaped to our side with the meteorite shard, which was a necessary part of his plan. This whole "Portal-Keeper" backstory was elaborated more on in the early scripts and possibly cut footage.
He could not then simply slip more and more dinosaurs over because the tunnel was blocked for 20 years. Daisy's mother clearly throws herself into a support beam, collapsing the tunnel. Any matter attempting to cross over would be instantaneously fossilized as it attempted to co-exist with occupied space (like in StarGate). It would only be unblocked years later by Scapelli's excavation. Iggy and Spike reference this near the end of the desert sequence.
You may dislike the costume design, but it and the makeup effects were actually praised and received numerous awards. Likewise, the production design for the parallel world's sets was a consistent plus in many reviews for the film.
The animatronics (such as Yoshi) and CGI work were groundbreaking for the time. Many things had never been done before, such as the "Daisy's face in the rock wall"and the particle effect during merging effects. The pan-in to Daisy in the tower actually took over six months to render and was deemed impossible. As for the animatronics, the Jurassic Park production actually sent their crew over to study what was being done and learn from the Super Mario Bros. team. At one point they even considered hiring them to do their own dinosaurs.
That's about all you discussed that I wanted to respond to. Your review was very insightful and well-produced, but otherwise missing out on certain key points. I hope my message has helped you understand and possible even appreciate the movie even more. I'd also be happy to answer any questions you might have since I've personally spoken to many people that worked on the movie.
I also want to say that I'm a huge fan of the games, having grown up on everything from the original since I was a kid. The film's differences only makes me enjoy it more. It's fascinating how they realized the games in a live-action format.
