As you probably already know, this game is using "standard" 256 color palettes, where every color is saved in X8R8G8B8 pixel format. What you probably also know, is that Arcanum is using DirectDraw for the rendering, and there is no support for windowed mode in Arcanum.
Anyway, I just found out that there are a huge design flaws regarding the color palettes and DirectDraw usage.
First of all, Arcanum isn't using IDirectDrawPalette interface at all, and all the color index to pixel conversions are done on CPU. This slows down whole level loading process, but that's still okay, no big deal.
Secondly, the game is running in 16bit fullscreen mode. Yes, you read that correctly, 16 bit color depth, not a 24bit! What does it means? It means, that 8 (or even 9 bits) are removed from every color from the color palletes in pixel format conversion, so the range of possible color shades is significantly reduced, from 16 777 216 to 65 536 (or even 32 768), thus the overall graphics quality is reduced significantly as well.
It's 16bit color depth, but it doesn't mean that it's R5G6B5 pixel format. The DirectDraw also supports X1R5G5G5 pixel format, and it's up to driver which pixel format it chooses for 16bit color depth.
Anyway, few year back, I made a mod for Arcanum, that forces the game to run in windowed mode, which was disabled in Arcanum in release version, because it wasn't finished and fully working feature.
What's surprising, is that when the game is running in windowed mode, there are no pixel format conversions, and game uses a full 24 bit color depth range. That's great, because it means that it's possible to force the Arcanum to run in 24 bit fullscreen mode.
If my time allows it, I'll fix this problem in January, and release it as .exe patch. I found this issue thanks to my DirectDraw emulator, and hopefully it will be useful for finding bugs in other games as well