XaoS can work in either palette or truecolor mode. Both modes have advantages and disadvantages. Palette mode allows effects such as palette rotation, while truecolor mode allows smoother incoloring and outcoloring modes and the truecolor coloring modes. If your display is 8bpp, you can enable this filter to get truecolor emulation (but, obviously, not with as many colors as a real truecolor display).
Available as: menu item, command line option