Agreed, alternating vertical lines doesn't look good.
If there's any confusion; that's not what I was saying. The image is dithered with vertical lines (so that's what it looks like in vram), but the image is always shown as alternating checker board pattern - never vertical lines.
The alternating checker board pattern concepts been around for decades, with games in the 90's doing it, and including a couple of PC companies advertising using a 'software trick' to expand 262k palette of VGA to 'millions' of colors haha . But the method I'm talking about is applied to the whole BG layer(s), and doesn't require two images.