Color transitions are hard, and that illusion is pretty trippy. Beyond that, my sense is another big problem most people run into when they try to light pixel art (or any hand-painted asset) is that the asset is almost always "pre-tonemapped" by the artist. By first inverse-tonemapping the asset before applying any lighting, and then re-tonemapping afterwards, you can get pretty good results (assuming you can work out your artist's intuitive tonemapping function). Here's a fun article which explores the idea a bit more: http://www.codersnotes.com/notes/untonemapping/
I think cause of this article problem is not that textures require some "untonemapping", but that they are typically stored with sRGB gamma, and thus should be converted to linear for lighting, and converted back to sRGB gamma in final pass. (either by explicitly using 2.2 gamma in shaders, or graphics API conversion, eg. in GL using GL_SRGB8_ALPHA8 format and sRGB framebuffer with enabled GL_FRAMEBUFFER_SRGB)
