1. A method for increasing luminance resolution of color panel systems, comprising: (a) inputting an image, I.sub.0, having a first resolution, wherein image I.sub.0 includes color difference images, C1.sub.0, C2.sub.0 and a luminance image, L.sub.0 ; (b) manipulating images C1.sub.0, C2.sub.0 and L.sub.0 in a first course, including: (i) filtering and subsampling the images to form images, C1.sub.1, C2.sub.1 and L.sub.1, having a second resolution, H.times.V; (ii) converting images C1.sub.1, C2.sub.1 and L.sub.1, to a first RGB domain image, RGB.sub.1 ; (iii) spatially multiplexing RGB.sub.1 into an image I.sub.A, having a third resolution, 2H.times.2V; (c) manipulating image L.sub.1 in a second course, including: (i) upsampling L.sub.1 to form L.sub.2, having the third resolution; (ii) forming a difference image, I.sub.D between L.sub.2 and L.sub.0 ; (iii) converting image I.sub.D into a second RGB domain image, RGB.sub.2, using predetermined values for C1 and C2; (iv) subsampling RGB.sub.2, spatially and chromatically, into an image I.sub.B having the third resolution; (d) combining I.sub.A and I.sub.B, in a pixel-dependant manner, into an image I.sub.F ; and (e) dividing I.sub.F into RGB components at the second resolution.