If your picture is any indicator, I can definitely see the color changing, although as you say, the colors are blending together a bit so you can't see discrete bars. What are you hooking up through? Composite/S-Video/Component? If composite, I've got to figure you've just got a ton of color bleed, and as it gets brighter, they're going to blend together more just based on how the phosphors light up. I'll check on my set and see what the 240p test looks like, but I personally wouldn't monkey much with the service menu. The only thing I did with mine in there is to mess with the horizontal and vertical size; all the rest is terribly unintuitive, and I don't want to nuke the set.
EDIT: Mine is the same, S-Video on SNES. Actually, mine seems to start blending even sooner. Honestly, I wouldn't monkey with it. I still think it's just a function of how the set displays compared to an LCD panel; I don't think you're going to get strong separation at the higher brightness levels on a consumer-grade TV, even if it is a really nice Trinitron. My guess is that you'd have to have a PVM to see it, and I
suspect that even that might show similar results.