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Consider it this way: Probably nobody will appear at your door and kick you in the stomach if you break any rule, even the resolution one. :)

Stick to the given resolution, four colors, and use tiles and sprites rather than anything polygonal/dynamic and you're fine in most people's opinion.

If your game plays well and feels like it could have been on the Game Boy it's fine, even it would have been slow as hell.

If you want, look up "Elite" for the Nintendo Entertainment System. Yes, it's been done and it's in full wireframe 3D even though the NES had no 3D hardware (or software) support and essentially tiles and sprites only.

For most it's just for fun, a learning experience, or some creative way to try something new and share it with others.

If you want to participate, just do it. Don't worry too much about the rules or restrictions. Bend them as you see fit, just try to stick close to them.

Also keep in mind the notes above are mixing up GB/GBC a bit. Originally you only had your 4/3+1 grayscale palette and nothing more. The palette swaps for sprites were introduced with the GBC for obvious reasons.

Phu! I mean, for us n00bs that are just starting out with game dev. that would have probably been... impossible? :D Well, not necessarily, but definitely harder for sure. So I for one like those bendy rules a lot more, I don't think the goal here should be creating an emulator for this thing :)

Nope, there are two palettes for sprites which source from the 4-shade gamut. IIRC GBC uses 8 palettes for the sprites and those are sourced from that 5:5:5 RGB cube with the really weird gamma ramp and side effects.

Yeah, had a look around and there are indeed two palettes, but the only difference is the transparent color as far as I know. There's still a total of 4 colors only obviously.