Does the AGA graphic on board allow you to have more than a 4 color desktop?
Absolutely, yes it does allow that. You can have up to a 256 color desktop without hacks. Adding hacks to the mix, you can even use a HAM8 screen. Keep in mind that the AGA chipset is very old. So, when you crank up the colors like that it gets very slow! If you're running a modem on the built-in serial port, it will slow that down too because the higher # of color screen modes use up a lot of DMA time, leaving not much left over to service the serial port.
If you're not planning on putting it in a tower and adding a graphics card (i.e. you're sticking with using AGA), then I would definitely recommend that you get FBlit. It forces the system to use the CPU as the blitter in appropriate cases. Thus, it speeds up a lot of display stuff. You can get FBlit from the following URL -
FBlit Downloads.
Also, if using AmigaOS 3.5 or AmigaOS 3.9, make sure you read the appropriate FAQ. There's lots of valuable information in them! Here's URLs for those:
AmigaOS 3.5 FAQAmigaOS 3.9 FAQ