Beautiful use of dithering (I'm pretty sure it's computer-generated, too, heh) to enable the various subtle cycling effects. the palette's kind of obscenely large, but not surprising really.. I suspect the originals were made with a tool that overlaid color cycling layout onto a base picture
As for the 'blend' animation, that seems to be a simple linear interpolation with wrapping at edges, so yeah, just like subpixel animation.