Fe8's palette system is pretty simple actually. It's only different so as to accommodate branching promotions.
Under "Battle Palette Editors" in the FE8 Nightmare module package, there should be two modules: "FE8 Palette Association Editor" and "FE8 Palette Association Editor Part 2". The first defines which classes the unit should be in for each class position, and the second defines which palettes to use for each class position (Unpromoted 1, Unpromoted 2, Promoted 1, Promoted 2, Promoted 3, etc). If the unit's class doesn't match the class that they should be, the generic palette is used to prevent color vomit from mismatching palettes.