There are 2 ways to do it. If you are on a pallette display, compute the average of the foreground color and the background color of each palette entry such that you can use dual playfield mode on the blitter window and single playfield mode for the display. If you want to support a graphics card, on the other hand, you'll need to use alpha blending to accomplish transparency.
Also, if you are using an extended colormap structure, each entry is 96 bits per pen color. That's 32 bits per component.
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