The only think I've used it on so far are Workbench 3.5 and UFO - Enemy Unknown AGA so I haven't noticed any problems with colours... yet. I guess I need a good AGA shoot-em-up to check it out
Try starting Deluxe Paint, Brilliance or any other GFX program if you have any. First make a 256 gradient of red and put it out on the screen. Then try the same with blue and green. It looks completely awful... instead of having 256 nice different variations you will see 16 variations.
Im hearing people say that these sd/ff produce chunky looking graphics. Apparently, a good tv with a scart connector will give better results with games??? Is this true?
Depends. If you remember how it looked playing old DOS VGA 320*200 PC-games on a VGA monitor that is about what to expect from playing games in low resulotion together with a scandoubler/flickerfixer. It will for sure look "smoother" and give a more high-res feeling when playing on a TV with a RGB-scart, and also look very sharp depending on what TV you have.