[miloshh]

That would just increase the resolution. The real problem is that the device is way too dark to display the levels of radiance you see on a bright day. Tone-mapping has to be used to bring those levels down, and there is no "correct" way to do that - one has to play with settings.

[cma]

It wouldn't increase the resolution, it would increase the dynamic range; for two shots with different exposure you would do 4 pixels white if both were white, two pixels white if one was full white and the other full black, etc. (your flat panel probably already uses a similar approach to get roughly 8bits of overall color-depth out of 7bit elements)

[miloshh]

I meant intensity resolution (or color depth, as you say). Dynamic range is something else - it is the interval [darkest, brightest], or their ratio if you prefer.