and some dithering.
Dithering would be pointless on such a small peice.
I agree, when you've got a 2x2 highlight, the only way you could "dither" it into the rest of the color would be one pixel on each side of the highlight...and then you start running into other parts of the sprite, making it look messy. For smoothness' sake, more colors are not always a bad thing.
However, I do think there could be some more level seperation on the greens. The darkest green is too close to black, and otherwise I think you could get by with 4 greens instead of 5.
Wait, that's not what this thread is about anyway, is it?