Well let's look at the "kun fu" kana: it actually fits neatly within the crevices of each character, giving it a very dynamic, fluid look in some ways. The English text we have here for Kung Fu instead looks like those old game fonts there x8x letters are spaced out at 8x8 increments, sometimes leaving weird deadspace between fat letters and thin letters (e.g. 'Did' might look more like 'D i d').
Maybe tilt some of the letters of Kung Fu into each others' crevices, like the kana has? Actually, that seems really cool for the English version, as some of the letters would be at angles as if being thrown by the other, like one was picked up and is in the motion of being tossed around, or of trying to get at the other letters. Kinda expressing the game action itself :o Like, the 'K' and the 'U' feel like the could compact together well (still looking at the bottom-left choice).
