I'm kind of confused what's going on here. Typically, with this kind of thing, you convert the input image to black and white and then, for each pixel, choose the character whose average value most closely matches that pixel. Then you print out that character in a fixed color. The point is generally to convert the image into a format that would be able to display on a simple text-only output device, like a typewriter.
But this seems to be varying the intensity of each character as well, which means you'd only be able to display the result on a full color display in the first place.