Thanks!
And... done -- I have updated the drivers to include 640x480 resolution. Not sure how that slipped by me!
Regarding the bug you mention, I tested the drivers on Windows 2.03, not 2.11. When I have some extra time I'll spin up an image with 2.11 and debug.
And regarding 256 colors in Windows 1.x and high color on Windows 2.x, it might be doable but probably not worth it, and might even have some negative tradeoffs. First, I'm not sure if there was ever any software for Windows 1.x that required 256 colors, or would even benefit from it... And then on Windows 2.x, same argument: would any software benefit from high color? Windows 2.x doesn't support device-independent bitmaps, so we can't have things like photos or 24-bit images on the screen at all. And also, various programs actually depended on the graphics being planar (i.e. 4 bit planes, giving 16 colors), which already doesn't work well with 256 colors, and would fail entirely with high color.