I am just reposting this bug here from the Ngemu forums, so it does not get lost.
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Bug: The LCD colors option does not work with compiles from r085 and later. Render API does not affect this.
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The option works in SVN r020, but is broken in SVN r085 onwards.
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I can't compile VBA-M, so I can't narrow it down further to a specific SVN revision.