Drag wrote:On the RGB PPU, the games would be completely unplayable due to a completely white screen.

Yes, very unfortunate. I can only speculate why Nintendo made PPUs that had features incompatible with each other. My guess, then, is that the original designers of the PPU (at Ricoh?) implemented the emphasis bits and 1) never explained their use in docs for programmers, or 2) told programmers they existed but NOT to use them in regular operation, or 3) told programmers, said "go wild", but then forgot about the emphasis bits when they had to go back and make an RGB version of the PPU. Or, 3) plus 4) since they apparently used a 6-bit DAC for rather lame colour decoding on RGB PPUs, the engineers at Ricoh couldn't be bothered to expend extra die space to implement proper mapping tables for the emphasis bits. (They could have at least had a "halfbrite" function per RGB channel at little additional cost and still keep it totally compatible with the composite PPU...)
Drag wrote:Though, this brings up another point of interest, lots of European-developed games will intentionally leave the palette darkened via the emphasis bits. This isn't just on the NES either, several European-developed SNES games have super dark palettes as well. Why is this? It must have something to do with the PAL standard or something...
Again, just speculation, but most likely European programmers never used official Nintendo docs for NES programming. All of their knowledge was based on reverse-engineering (as RARE confirmed doing it this way). Most likely another programming house (probe, Eurocom...) reverse-engineered the PPU and made docs but thought that the emphasis bits were supposed always to be on.
As for the SNES, it probably just comes down to the highly-shaded, glossy European graphics look at the time. (Contrasted with the MS Paint look of US-developed games.)