Yes, Diamond Blizzard trivializes Forest of Magic (except for Parasites, seeing as they're pretty strong anyways). Kedamas might not be taken out in one shot either, but that leaves them weakened enough for someone like Aya or Reimu to take out. And always ALWAYS keep as much healing as you can! Items, equipment, abilities...I tried to make everything important to survival. ^^;
Yeah, the Misty Lake puzzle wasn't exactly that great, so I reverted it back to its original state.