Upon the release of Awesome Possum... Kicks Dr. Machino's Butt, Time Warner Interactive was sued by Paul A. Roginski, who claimed that the game copied an unreleased manuscript for a comic book with a similar environmentalist theming and the same protagonist name. The court ruled in favor of Time Warner and Tengen.

On the HUD of Awesome Possum Kicks Dr. Machino's Butt!, there is a portrait of Awesome that will go from happy to agitated as he takes more damage - in prototype versions of the game, this instead has Awesome's skin slowly chip off to reveal his skull. Additionally, after dying in the prototype, he will turn into a skeleton, and when his last life is lost the screen will cut to red instead of teal. The final game's Game Over screen, which shows unspecified tombstones covered in trash and rats, could be considered a leftover from this darker direction for the game.