Ruymaru, yes it's an actual c64 mode, called hi-res. my piece Eve and Waiting at Dusk are at hires as well.
The restrictions are pretty simple, but severe. They're made for typing programs, for christ's sake: 2 colors per 8x8 singlepixel character. Any two from the palette (which is better than speccy where you have to have two bright or dark version colors, but not one each). That is all. This is the only, BADASS restriction of the mode. 320x200.