Too many colors

The VDP's color RAM is working overtime while displaying Competition mode's level select screen. When first entering this screen, the first palette line holds colors for the background and menu elements, the second and third lines contain Sonic and Knuckles' palettes respectively, and the fourth line is used to display the grayscale level previews.

Then, once the characters have been selected and their sprites scrolled off-screen, Knuckles' colors are replaced with the colors for the currently highlighted level, while Sonic's palette continues being used to display level names and the best time text on the right hand side. The color palettes for the level previews have to be carefully designed in order to match the single grayscale palette used by every preview picture.

There's something subtly wrong with the grayscale palette itself, though. Do you see it?

Looking at the preview picture for Azure Lake, both the clouds and the part of the sky near the mountains appear pitch black under the grayscale palette.

If we examine the colors in the palette, we find the second color is $EEE, white, the fourth color is $AAA, light gray, but the color between those two is $000, black. If we replace that color with the more logical $CCC light gray, Azure Lake's grayscale preview picture looks a lot better:

Perhaps most dramatic is Desert Palace's preview picture. The original version (center, below) almost resembles an ink blot when compared with what it's actually supposed to look like: