Recently, though, several different folks all independently developed their own solutions to the dithering problem using pixel shaders. Here are the raw images to which we'll be applying the shaders:
Three of these games are for Sega Genesis, which relied on dithering extensively, and the other is from an SNES game that uses "pseudo-hires transparency," which functioned similar to dithering insofar as the artists expected the vertical lines to be blended together by a CRT TV.
CBOD
First off, we'll look at coastkid's CBOD shader, which uses three shader passes of 4-pixel blur using various threshold values. It can be a bit blurry but does an impressive job of smoothing out the dithering, particularly with regards to vertical dithering patterns, with which the other shaders often have trouble:
GTU
Next up, we have aliaspider's GTU shader, which uses a "pixel bandwidth" variable to determine how much horizontal blurring should occur. This shader also includes light scanlines (which can be lightened or eliminated entirely by manipulating variables within the shader) and gamma correction, making it a one-stop option for people who want the benefits of CRT blending, color and scanlines without any heavy-handed phosphor emulation, etc. Its handling of pseudo-hires transparency is particularly nice:
For reference, the SNES shot used a bandwidth of 512 while the Genesis shots used a bandwidth of 320.
MDAPT
The last shader is Sp00kyFox's MDAPT, which stands for 'merge dithering and pseudo transparency.' This shader
Unfortunately, it sometimes has a few false-positives (notice the '200' in the next shot), but nothing too terrible:
When paired with some other shaders, aliaspider was able to use MDAPT to produce some pseudo-hires transparency upscaling that is nothing short of magical:
You can check out a couple more shots from aliaspider here.
Of these shaders, MDAPT and CBOD are available in Cg format, while GTU is in XML/GLSL format