It's sort of temperamental. It's been on now for about 20 minutes and the display is near perfect.
Electrolytic capacitors dry out and go bad after many years. The internal RF circuitry in the 2600s seems to be prone to fading out after a while. You might try replacing the caps and see if that helps.
I've found a fellow who sells schematics and kits for upgrading a 2600 to S-Video, thus eliminating the RF circuitry. It took him a long time to fill my order (several months) but I finally did receive the DIY kit about a week ago. I have yet to install, but the installation is pretty simple. His site is here:
http://www.longhornengineer.com/Videomods/VideomodsIt's also pretty easy to convert a 2600 to composite output, you may be able to find directions around the web, or on rec.games.video.classic. But if you're going to be cutting and soldering anyway, might as well go for the best output possible.
