Although only 16 different colors were allowed on c64 (more exactly, in the VIC-II), which came from a fixed palette, the video output created an analogoue tv signal.
Which means, somewhere in the final, D/A conversion phase of the vic signal generation, a palette should have existed, which defined the different rgb signal levels, indexed by the 4bit color code.
What is known from it? How many analogoue signal levels did it have?
(Btw, in this 16-color palette, there were 5 greyscale colors. Thus, the number of analogoue signal levels should have been at least 5.)
Extension, reacting @Mark's answer:
Ok, the TV output had a YIQ. But, somewhere in the VIC II, there should have been something with a color index 0-15 as input, and with an analogoue YIQ as output. I suspected it was some hardwired palette table and a D/A converter, but you say it wasn't. What was it then? How did the 4 color bit -> 3 YIQ signal level work?