These games use the color calculation (with ratios) to make a smooth fade in and fade out. It's what I'm doing now. It might be possible with CLUT sprites too, but I have to try a few more things first. But the only way to do actual gouraud shading on color bank sprites requires a ton of color RAM, but you only have 4 KB shared for all the background layers and the color bank sprites.
High res mode is attractive, but you can't simply flip a switch and make it work. You really need to setup everything in a specific way and there are many limitations.
I could try it for menus and such, but even for that I don't want to waste time on it.