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I am using a tufty2040 and i wanted to use 565 to show high quality jpegs on my badge, but spritesheets did not work. Simply allowing this and generating a 128x96 Spritesheet (128x128 explodes memory-wise) and using https://github.com/jimmywong2003/PNG-to-RGB565/blob/master/png2rgb565.py with isSWAP=True to create the final spritesheet allows me to have a repeating high quality jpeg character being animated and a high quality spritesheet additionally to show icons, elements and borders.
Please allow this by default, as its the same as the 332 version and it makes my life easier by being able to use regular releases (current main seems to have broken battery reading)