I love this, the music building up makes me want to get further! It might be interesting to have the palette changes be automatic as you progress, rather than being tied to a button.
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I like the idea to have the palette change automatically and it reminds me of how it works on the NES Tetris.
When I first implemented it the change was a bit jarring and it disrupted the flow (you wouldn't instinctively know which enemies to avoid and which ones to absorb if you were in the middle of a chase), but with a carefully designed palette progression it may work well :)