Comment by kragen

We've had a couple of other recent discussions on dithering: https://www.rtings.com/tv/learn/chroma-subsampling has nice illustrations). Each 2×2 4-pixel block on the display would have one sample of chroma, which could be a 12-bit sample: 6 bits of U and 6 bits of V. Moreover, you can interpolate the U and V values from one 2×2 block to the next. As long as you're careful to avoid drawing text on backgrounds that differ only in chroma (as in the examples in that web page) you'd get full resolution for antialiased text and near-photo-quality images.

That wouldn't liberate you completely from the need for dithering, but I think you could have produced much higher quality images that way than we in fact did with MCGA and VGA GIFs.