Judge by yourself:
http://www.smspower.org/Development/Palette#MasterSystemMarkIIILast column (called ...) is how it looks on SG-1000.
Galaga for sg-1000 is hard to play because you can barely make out dark blue shots over a black background, if you pump up the brightness you can get thru it.
My opinion is that the palette does hamper playing many SG-1000, they look off, mind you many are still playable just not too easy on the eyes, and a selected few look very nasty, so much so you likely wouldn't want to play them much.
[BTW: I am not saying that on SG-1000 they would look like fine artwork, but they should look definitely better as the colors were chosen purposefully that way wrt the rest of the palette]
Keep in mind the you need an actual SMS to play SG-1000, not just a PBC for your MD/Genesis.