This blew up while I was asleep so I’ll try my best to answer now!

1. Yes the palette is being optimized for as well which is imho what makes it different from a quantization approach 2. That’s a good point. I cite a reference blog post which does use blur in the loss function towards the end of the post. Unfortunately I think pure blur would still produce a noisy image as it would remove variance in the eyes of the loss function but not the final image. I would guess something like the example I give with purple, red, blue pixels would still be a problem for blurred loss