I like having mine on 16-bit, because it makes my machine run faster (it disables Aero).

Why not just disable Aero manually? Using 16Bit colour for this reason seems a little odd... to me anyway.

Chances are that there's a valid reason why 16Bit display is not supported although it would be helpful to have the minimum requirements for AppGameKit on the website somewhere (I couldn't find it).

What hardware after Windows XP or maybe even earlier does not support 32 Bit colour?

Please post this as a bug in the issues board (http://code.google.com/p/agk/issues/list) and I'll see if I can cobble together a machine that uses 16-bit graphics to test it I agree AppGameKit should be able to run on the widest range of machines!