Take your 16 bits and use the bottom 7+7 bits. Split these into 5+5+4 to get you 32k color. Use the high bit of one of the bytes to synchronize the transfer, so you know which byte is odd and even.

Or change your 14 bits into 3+3+3+5 giving 512 colors in 32 intensities.

An even better alternative may be to use the bits for HSV (hue+saturation+value) instead. You might have 6 bits hue giving 32 different colors. 4 bits saturation giving 16 amounts of color intensity. 4 bits of value allows 16 steps dimming.

Conversion from HSV to RGB can be found at
http://en.wikipedia.org/wiki/HSL_and_HSV

You can use integer arithmetic for the conversion.