Okay last bit about the transparency that I don't quite understand.

If this is an option, then we could literally blend colors to make a zillion different new colors... thus, putting us pretty much back at square one: don't use the palette.

Even if you were to restrict transparency to only being painted directly on canvas- this would eliminate color blending of course, but you could still slap down 50 shades of shadow.

I think I'm looking for a 100% solid "do or not do" if that's okay.

I hope these questions help define your guidelines for future GFX enteries.