1 bit saturation is pretty much equivalent to reserving a particular hue for grayscale...
Um... 1 bit saturation means two saturation values. It doesn't mean they have to be 100% and 0%. Since there is a hue value already reserved for gray colors, you can have 100% and 50%.
The did it because I think the color generation is done by a 12-stage john-son counter or something in the like. Therefore, the 12 hues available. They would have to clock the PPU faster, or decrease the resolution, to get more hues, and it was probably damn fast already for its time.
I know nothing about the hardware used to generate colors. Would it be unreasonable to use a different component that can calculate more hues? It doesn't really matter anyways. The number of hues was really a pretty minor point. What I was driving at was that I can't see how it could be that impractical to have more color options in general, especially since this is one of the few things a cartridge can't address with custom hardware.
It's all pretty moot anyways. We can't go back and change it, and we all know it was pretty spiffy for its time.