Okay, I realized it was creating the palettes backwards (noticeable when loading the palettes in GraphicsGale) so I went to fix that but wound up deciding to change and add a few other things. You can now draw onto the palette with a solid or semi-transparent brush. I've
included the .GM81 with the .EXE in the .ZIP, but it's a sloppy rat's nest devoid of good commenting and made in haste, so good luck with that.

By the way, a .PAL file is really just a text file that stores all the RGB values of each color in the 256-color grid. It looks like this:
JASC-PAL
0100
256
255 216 109
255 190 91
255 194 88
255 198 86
255 203 84
255 207 82
255 212 80
255 216 77
255 220 75
255 224 73
255 229 71
etc.
etc.
The first 3 lines store info about the .PAL:
JASC-PAL
0100
256
The rest are the RGB groups (for examble 0 0 0 is black, 255 255 255 is white, 0 0 255 is pure blue, etc.). So really my app is just outputting a text file with a .PAL extension.