Expanded palette hack

Am I understanding you correctly? This reduces the processing time any time a byte needs to have its bits reversed?

yes, provided there's a second byte that needs its bits reversed at the same time.  this optimization intersperses the two reversals; each shift or rotate now does double duty.

The way you described this, it sounds like this optimization would be beneficial even if the palette hack isn't in place.

to be sure, the optimization you describe, not the one you quoted.  the latter was in the "elsewhere and unrelated" section of my post.