1.) I think the use of switches and colouring in the specific sprite for which room you are in works really well.
2.) As it stands currently, there doesn't feel like there is a end goal. If there is, I can't easily find it. I think adding a puzzle aspect to the rooms would be interesting. Maybe in one palette you can't see the key because it's yellow on yellow, but in another you can, and so you can grab it to unlock a door.