Hi John,
let's try to sort out different things.
With version 9.20 the support of RGB565 and Index8 bitmap resources was introduced - this means that you can use these formats as sources within your GUI application. This has nothing to do with the destination format (= your framebuffer format). So from this aspect, there is no need to update. (Anyhow: We highly recommend to use always the latest version....).
The physical connection between your i.MXRT target and the display is not relevant for the framebuffer format. The integrated display controller LCDIF takes care to convert the framebuffer color format (e.g. RGBA8888, RGB565, Index8,...) to the display format (e.g. RGB24, RGB18, RGB16,...).
The CLUT is organized as 32bit color values. So in principle, it should be sufficient to use NXP.iMX_RT.Index8 instead of NXP.iMX_RT.RGB565 within your profile and to use the corresponding graphics engine on the target.
Can you try to run the example ColorFormats (should be provided in the folder /Examples of our Build Environment) and test the Index8 color format? Does this work?
Best regards,
Manfred.