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Not so!
I have used a program called "iPPlus" from Ulead Systems that has taken a full color photo and rendered it down to a 16 color bitmap that maintains the integrity of the photo. Whether it uses the actual 16 displayed by Paint, I'm not sure, however it's only 16 colors and it does a terrific job at maintain the overall "full color" appearance of the photo.
This is not used with a karaoke song, it's a "goodbye and goodnight screen" (with audio) that just sits on the TV while the audio plays and has a picture of my wife with a big "Thank YOU for coming, drive safely.... yadda yadda yadda...."
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