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Palette swapping is allowed -- it's actually one of the optional challenges! We're not enforcing 1 bit hardware limitation.

Ah thanks. I wasn't sure if that meant we can swap the palettes during the game or it was an optional challenge to let the player choose a palette. Good to know.

I think there might be a slight risk when being judged if you elect to do this, but I would personally not take points off, as long as it's clear there are only two colors being used at any given time. 

I was only thinking for variety to be fair (think Head Over Heels on the Spectrum). It wouldn't have been a critical element. Thanks for the replies.