How Does Compression affect Integrity of Colours?

When compression doesn't completely mess up the colours, it often simplifies the image, and functionally pixelates it.
The pixelated image above has the same colour balance as the other two.
So how does compression affect the integrity of colours?

Think of an image as having two distinct layers: the black & white layer, over which the color information is laid by the color layer.
Bad compression also uses poor color sampling -- aka color resolution -- to save file size.  It will average the values of two adjacent color pixels to create a larger pixel of the avaraged color.  If it's REALLY bad -- as in DSLR video and HDV -- it will average the colors of FOUR adjacent pixels an even larger pixel of the average color.
And what do you think that would do to color integrity?

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