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But we can use the full NES color palette at the same time, or should we limit to 3 colors per sprite, and using only 4 palettes of 4 colors at once (so, only 16 colors at screen)?

Anyway, I'm not a great pixel artist, so I'll restrict myself to 16 (or less!) colors, and 8x8 sprites ;)

Yup, you can use all of them at the same time.