[EDIT: r_coloredlights 0 and fullscreen mode fixed. I hope. Same download links.]
[EDIT2: Added r_lightsaturation cvar for colored light]
[EDIT3: Minor speed improvement, darklight works, and just one (the pretty one!) colored light mode.]
[EDIT4: Unsigned short fix (thanks to Knightmare for the tip) ]
Oh, yeah, and there's a cvar called 'sw_transmooth' that dithers transparent surfaces.
Download dll [edit-updated link]:
Source code:
Notes about the code- It can be copied into the 3.24 source folder. (Make a backup for this purpose.) But I don't have VC 6, so I built it with VS 2013 (project included in the ref_soft folder).
This started with the colored light code leilei added to stock Q2. Shaded light was completed among other things with head-scratching and borrowed pieces of engoo. Waterwarp improvement and dithering are from AROS Quake2.

That orange. r_lightsaturation = 2