ummmm. Huh? what exactly does this do... Being that i have not logged in to test it, i be wonderin...

Every ship has a tie-dye color scheme to it. The background textures also become psychadelic. It's s0 all over again!

I'll take a shot and gather that this is an ATi only deal. nVidia need not apply? :-(

Basically the Rage128 doesn't do a specific dual-texture mode that it is supposed to do. The ship and station colors turn grey with it off on a Rage128 and does 2 passes with it on.
So 2 passes is definately slower so if you aren't experiencing any problems don't enable it.
The Rage128 bug only seems to affect the Rage128 but we don't have every card available to test with.

For some reason if I run vendetta in windowed mode (OS X 10.2.8, nVidia GeForce 4) the colors are very yellow and weird, but if I turn the color hack on, they go back to normal.

With a rage 128 with it off, the colors are yellowed, with it on, normal. Don't know the actual reasons behind this though.

Hmm, odd. I'll have to try our gf2mx. We don't have a gf4 unfortulately so i can't test that.