I have an older version of photoshop without the colorpicker that only picks from the current layer so I had to come up with a way to control dithering.
1) Set everything up as described and make a black to white gradient.
With the box selection tool set to a fixed size, select areas in which you see each color level and dithering respectively.
2) With your drawing layer selected, press ctrl+c and ctrl+v.
You will get a new layer with your palette.
Make sure to move this layer above the pattern and posterize thingamajig!
3) Feel free to lay your palette out in any way you are comfortable working with.
You can copy it just above the drawing layer to get a preview of the colors you pick from.
Edit:
I thought my photoshop was bugged at first but then I found out that you need to untick "Blend Clipped Layers as Group" for it to work.
Edit 2:
Never mind.
Seems like that blend if option is bugged on cs2 and won't count as "transparency" for clipping groups.
Pencil eraser is the only option then.