MD is gimped by system RAM, 64KB is too small for a 68000 machine, even with access to 4MB or more of ROM.
VRAM is kinda cramped, too. 64KB isn't enough for even two full-screen images (including tile data and pattern maps). DMA helps but it's slow compared to having more data available immediately. I'd liked to have seen some type of support for VROM in addition to VRAM, would have made certain graphical effects much easier to code at the expense of ROM space.
One thing that helps the MD with color vibrance is the fact that the default RF/composite video output very nicely blends adjacent pixel columns together. You know that "horizontal-only" dithering that is so common in MD games (where the dithering appears as a series of vertical lines)? That's why they did that, and why emulator screenshots don't generally do the MD justice. Especially check out Socket on MD, it's completely full of such dithering. Check it out on an emulator that offers a horizontal blur (possibly called "CVBS" or "TV" mode), or even better an NTSC video filter. Compare screens with and without the setting enabled and notice the smoothness of color gradients is much improved, and the general color count will go up.