Yes, you could for example achieve the tunnel effect described above with a 16x16 or 32x8 texture using a 256-entry palette.

Unreal by Future Crew has an effect that comes to mind that is probably implemented exactly like that (on VGA mode 0x13), just more of a wormhole than a tunnel: https://www.youtube.com/watch?v=InrGJ7C9B3s&t=4m40s