Even the cart version of SOTB2 does it:
Sheath: Yeah, you can't do per pixel color change on the line. Even if you could sync the cpu for that and not get 'snow' onscreen for that line, you'd be wasting all the cpu resource on the active display. Enough to make a game crawl. That said, with very careful planning, you can use checker board pattern dither with this effect to get better gradients. Instead of using BG color #0, you use that and one other color. So you modify to colors per scanline. The down side of this is that sprites can no longer appear behind the BG layer that's right above the BG color #0 plane. The other down side is that you need a little more logic to handle it on the backend when prepping the 'display list'. But other than that, it's doable. On the Genesis, it helps give you more color onscreen. On the PCE, it helps give you a pseudo BG layer. On the Amiga, it works in both ways. Jazz Jackrabbit on the PC also used this trick IIRC (not for color, but for 'free' BG layer without the expense of manually blitting one).
I'm back in action.I read your blog recently and it's great to see that you're really back.
I wouldn't doubt that the Genesis would be up next for a shmup episode. There's just way to many great shmups on the system.