> I'd love to see a side-scroller or roguelike type game in this visual style.

The license says "you may not distribute the shader even if you modify it", so I don't know if you could. Obviously you'd convert the shader to HLSL and simplify it for realtime, but the vague language doesn't make it clear to me if a reimplementation of the shader counts as your own thing, or as a derivative for the purposes of "you may not distribute". Though I highly suspect the author would give you a go-ahead if you just email him directly.

A bigger concern I have for animated content is that dithering usually looks horrible in motion. It might be perfect for a Myst-style game, though - something with very minimal movement.