The reason Lion heart has all those extra colours (i'm not talking about the copper effects used on the sky,that, many games had, Gods, Turrican, etc) was raster effects were used.
You will notice that if you identify the floor tileset, you will see it has a colour gradient as it goes lower, that is raster effects that change the colour of those tiles on the fly. Furthermore, there is one level that has fog, for you to have an idea, even though the hardware techniques are completely different, what Lionheart does, through raster effects, is similar to puting an alpha mapped gradient over the tiles.
In this regard Lionheart threw everything at it - copper effects, raster effects, multi-paralax effects. It looks even better than most AGA games.
Notice also on the mountain backgrounds, the base has a colour gradient from the horizon upwards, the Amiga simply did not have those much colours for such gradients, it's an hardware raster trick.