How the hell did they get 1024 colors out of a 1981 PC?

Only qualm I have about that is I NEVER saw anyone with an IBM with a CGA card hooked up to a cheap NTSC tv. Color IBM was top of the line in the day, they always had crisp CGA color monitors on them. I don’t know if there was much CGA->composite converters around at that time either,

I’d like to see the results of an actual display (a Commodore 1701 monitor would suffice, those color-bleed pretty good) first, and what they used to get to the NTSC output the employ.

You don’t need a ‘CGA->composite converter’. NTSC composite output comes standard on every IBM CGA card, and on most clones as well: http://www.minuszerodegrees.net/5150_5160/cards/ibm_cga.jpg
(The cinch connector above the 9-pin RGBI connector at the back).
Also, the IBM 5153 colour monitor did not arrive until 1983, a few years later than the original PC with CGA.
So one would think that using the composite output to connect to an NTSC-compatible monitor or TV would be reasonably common. There were also various early games that took advantage of composite CGA, such as early Sierra games (Larry, Kings/Space/Police Quest).

If you want to see an actual NTSC monitor, you can watch this video: https://www.youtube.com/watch?v=O4dtJbb6Eow
NTSC on the left, RGBI on the right, both connected to the same system, with the standard IBM CGA card.
It actually looks better than the NTSC capture device we used for the direct video. The capture device suffers from high-frequency aliasing. The analog monitor filters that out, so you get nicer, more solid colours, no banding.

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