The problem with the color fringing of HAM mode is because the HAM mode isn't fully paletted. Only the 16 "base pairs" are paletted. The modify mode requires the pixel to the left of it remain static so that it can create the correct modification of that color.
Sprites, however, do not modify the screen memory thus making the possibility of at least one HAM mode game: "Pioneer Plague" possible. Since ECS sprites are 16 pixels wide and limited to 15 colors of 4 sprites horizontally from each other or each of 3 colors of 8 sprites horizontally, the use of sprites for all animated objects is impractical. The AGA chipset could make wider sprites but were still stuck to the same palette limitations.