So, apparently it is possible to use the 16 color mode for games.
In this video two guys are working on a game that use that mode.
https://youtu.be/surHot72dqc?si=gIYWB2XzVLdwcLW2

They find out how to use this mode because it is documented on the manuals of the Zenith SuperSport that use the same Yamaha V6355D video chip.