Nah indexing is not that good if you have a lot of colours in your skin.
Look this site over for a prog called "B.R.I.G.H.T.", it does a far better job of rducing the colours to 256.
Ah so its not on this site, but it is here ---> Bright - Texture Converter
There is a "Batch" file available on this site though, if you get stuck, just shout.