On a PC with millions of colours and gigabytes of RAM I understand the concept of artificial limitations.
On a 32kb device with 16 colors you have real limitations. I don’t understand adding an additional one. I have been playing around with the Pokitto for a year. The ability to do palette rotations and slides allows really cool effects.
In a screenbuffered mode (110x88@16 and 220x176@4) the screenbuffer contains indexes to active palette. So 1 palette at a time for entire screen. So you can’t (yet) draw sprites each with a different palette. But there are some ideas how to do that as well, nothing implemented though