Richard Stallman <rms@gnu.org> writes:

>     I don't know anything about Emacs' internals. Does an Emacs that
>     supports images always support colours, too?
>
> Emacs always supports colors, but the display in use could be monochrome.
> Use display-color-p to test that.

Pardon my ignorance: what happens with colour images on monochrome
displays? Are they displayed in shades of gray if
`display-grayscale-p' returns nil?  If so, the conversion of XPM to
PPM would probably do for such displays.

Are there any displays for which `display-images-p' returns t, but
both `display-color-p' and `display-grayscale-p' return nil? Is it
necessary to make sure that gamegrid.el DTRT on such displays?

If not, I suggest to simply convert XPMs via some Lisp functions if
Emacs is compiled without XPM-support on the C-level. I have written a
prototype[1] for this. What do you think?