I noticed that for Battletoads too. I haven't done an investigation, but I believe it's some in-frame palette change effects that the game uses, and as you may already know, this emulator has problems with that since we are using the 3DS GPU. It's something we can't run really fix without impacting performance.
I've tried my best in the latest nightly build to fix the BSX emulation, by porting some BSX code over from snes9x-sx2. I can actually get the BSX BIOS to boot now and you can walk around in the nameless town or whatever it's called, but I still couldn't get a number of games to boot - BS Zelda, BS Dragon Quest (gets stuck), etc. I tried booting those games directly, and through the BIOS, they either crash, or get stuck, or the BSX BIOS decides they are corrupted and removes them.
I don't really know what's wrong. I suppose that's the furthest I can go with BSX emulation, until someone familiar with BSX comes along to help.