Flash + 256 color palette

I'm thinking of using a 256 color palette to save some space in my Flash game. However, the game suffers some heavy quality loss if I use the inbuilt 256 color conversion. I know I can change the palette in the application menu, but no single palette makes all the graphics look decent.

So ideally I'd like to use a 256 color palette, but change to a different 256 colors after runtime, to differentiate between levels. (eg. one level may be a night-time theme on a day level, so by changing the palette, the game will look different, but still be 256 colors)

Q1. Is it possible to change the palette during run-time? Say I set application to 256 colors, but one level of my game uses a different palette to another level. Is this possible during run-time?

Q2. If I compressed my in-game graphics to 256 colors, but actually left the application at 32768 colors, would the Flash exporter compress the graphics to take up less space? Or would it be a waste of time?

Using 256 colors in Flash doesn't make any difference. The game will always use 24/32 bit colors.
You might be able to use a lower color depth to store the sprites with a lower file size. I think somebody mentioned that that would work.

Is the setting of the number of colors in applications property meaningless in Flash?

Yes :)

Well I did notice a significant file size reduction when I exported with 256 colors, however this is most likely to do with the 'lower color depth' that looki is talking about, rather than Flash actually utilising 256 colors.