1. A method of processing 8-bit color image data, the method comprising: receiving input color image data having 8-bit pixel data values; assigning a pixel type value to each 8-bit pixel data value based on a 9×3 tiling pattern, the 9×3 tiling pattern having 9 unique pixel type values in each 3×3 window of the 9×3 tiling pattern; encoding individual 8-bit input color image data values according to the 8-bit data value and the assigned pixel type value using an encoding table to provide 4-bit encoded color image data values, the encoding table having 256 rows corresponding to each possible 8-bit data value, with each row including a unique set of 9 4-bit data value entries individually corresponding to one of the 9 unique pixel type values, and wherein the table includes 9 columns corresponding to the 9 unique pixel type values with 8 of the 9 columns having clustered values and with the ninth column having 8 groups of two values; storing the 4-bit encoded color image data values in a memory; and decoding individual 4-bit encoded color image data values according to the 4-bit encoded color image data value and the assigned pixel type value for a current pixel and its neighboring pixels in a 3×3 window surrounding the current pixel to provide 8-bit decoded color image data values by: determining minimum and maximum 8-bit values from the encoding table for each neighboring pixel according to the pixel type and 4-bit encoded pixel data; identifying the highest minimum 8-bit value and the lowest maximum 8-bit value for the neighboring pixels; and computing a decoded 8-bit data value for the current pixel based at least partially on the highest minimum 8-bit value and the lowest maximum 8-bit value for the neighboring pixels.