So you can only select 16bit color( Thousands of colors ).
This is really a function of the NDRV, or native device driver. For nVidia cards there are two types, one is in the ROM of the Graphic card itself, and one is loaded by one of the nVidia extension in the System Folder. I don't remember right off which one, but I think it has the type NDRV.
You may need to try and find nVidia Extensions that work with you card, if they exist.
If you are able to change the screen Res, then you have one of the types of NDRV's loaded, under OS 9. You could try and remove all the nvidia extensions via the Extension Manager and see if the card defaults to 256 colors. If it does then you all set, just create a custom extensions set to boot to when you need 256 Colors.
If you can still change the screen res in OS 9 without any of the nVidia Extension enabled, but you still can't select 256 Colors, then there is a problem with the ROM NDRV, and you'll need the proper, or hacked nVidia Extension to enable 256 Colors. Otherwise, you'll have to see if the card has a flashable ROM chip, of if the FCode ROM for the nVidia chip is in the 1MB Mac Boot ROM( not the Mac OS ROM ) in the System Folder, but the Boot ROM on the logicboard.
I don't really advise Flashing the Boot ROM or the Flash Rom of the Graphics card, if it has one, because it could be quite difficult to revert from a bad flash, with no display. I only bring it up to say it can be done, not it should be done.