I just tried it (again) and I get color with my (towerized, Toasterized) NTSC 1200 through the composite out.
(Note: not the Toaster's output, the 1200's built-in output)
The colors look pretty funky, too, when you put a 256-color High-res, laced screen through an LCD monitor! (Samsung SyncMaster 150MP on the composite-in connector).
