Could you -or somedy else able to do it- a little 16 grey scales demo? (just a static image)
This way maybe you can give REAL COLORS to the empeg: after 2 or 3 minutes watching a psychedelic bad flickering monochrom screen, you have a chance to see pink elephants or flying blue cows I think ;-)

No, without kidding, just to see how it looks like. Personnaly, I prefer a flickering color than a dithered one for static pics, and 4 scales is definitely not enough for pictures...