I just wanted to reply back to add two things:
1) this looks like an awesome game. I have only played through the demo as of yet, though (recently gave away my system);
2) I have asked blargg, the author of the NTSC filter, that very question. With his permission, I am posting his own reply here, which I am judging to be both relevant and informative:
"I have fell on this great game, "Battle Kid" on the NES. Would you recommend one playing through RGB on the NES, even if it was not possible for a real NES to output RBG?"
"Heh, interesting question. What was the developer intention? Since it was developed in the past few years, it was probably tested a lot on an emulator. If that emulator was set for RGB display (no NTSC filter), then one could argue that it was developed with RGB in mind. On the other hand, it was developed for sale as a cartridge, and not for play on emulators, so maybe composite video is the real intention."
See, some people seem to prefer one setting, while others seem to prefer another. blargg seems to like the look of NES games played "in a setting part way between composite and s-video, that is, reduced artifacts and bleed, but not completely eliminated as in RGB." Of course, the personal preference may vary from game to game. This is why I here took the initiative to post here to see what was on the mind of "God," ahem, of the creator... the creator of the Battle Kid universe. Of an unique, self-existing world. Self-contained obstacles to salvation. Meaning, transcending the lurking perils characterizing that world one is found locked into.