is described how I managed to run Napalm.
With regards to the speed, you can try to experiment with the CPU Idle slider in WinUAE/CPU settings. It determines how much CPU power is given to the emulation. By default, the slider is at the most left position which means all the PC power goes to emulation.
With regards to the 8-bit graphics, I think it is a limitation of the game itself. But I am not sure. Napalm uses RTG system to display graphics and as far as I remember it always offered 8-bit screenmodes even with other software/games and even under emulation.