Ok, so for anyone else baffled by what the rules are, here's what I found:
-Walking on a Green Block changes it to Red.
-Heros (The sword guys) walking on Red Blocks will change them to Green.
-Hitting a Green Block with a pellet destroys it
-Hitting a Red Block with a pellet adds a Red Block
-Each time you hit an enemy with a pellet they transform.
-Bunnies <-> Killer Bunnies. (With huge sharp .... )
-Heros <-> Worms.
-Monster bunnies eat everything, you too.
-Monster bunnies sometimes spawn more normal bunnies after eating. (I think, only saw this once)
I found no way to "win"
I enjoyed this one.