Yes, lol =P They use this trick to get extra framerate (since they need to load less tiles into VRAM so transfer bandwidth becomes less of an issue).
EDIT: to give you an idea of how it works:
- Palette for frame #1: 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1
- Palette for frame #2: 0 0 1 1 0 0 1 1 0 0 1 1 0 0 1 1
- Palette for frame #3: 0 0 0 0 1 1 1 1 0 0 0 0 1 1 1 1
- Palette for frame #4: 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1
So essentially they store one frame for every bit of the pixel. Since the format is 4bpp, they can store up to four frames into a single image.