I find it convenient to start Linux in text mode (init 3) by editing
/etc/inittab appropriately, and starting the GUI only when needed.

The problem is, the screen in text mode does not display all the 16 colors it should, but displays only 8. The brighter colors are not displayed. For instance, ls is configured to display directories in light blue, but displays them instead in a dark shade of blue. Similarly, yellow appears as a shade of brown, and so on (in vi etc)

I'm running Redhat 8. I'd had Mandrake 8.2 previously, and this wasn't a problem at all then, so I know this can be rectified. I think it has something perhaps to do with /etc/termcap, but I have no idea how to correct this problem.

I know Redhat users who have had this problem before, and can't find a solution to this anywhere. Anyone know how to correct this?

Is your video card defined properly? What happens when you go into X, how many colors are displaying then?

X displays even 32-bit color perfectly. X works fine

I think this is a problem with all Redhat distros perhaps. If you have redhat (any version), you can check it out yourself:

Go to a console (with Ctrl+Alt+F2 for instance) and run ls
The directories should appear light blue, but they appear dark blue.

Or better yet, if you have emacs version 21 or above, run emacs and enter the command
M-x list-colors-display

It should open a new buffer that should show 16 colors, not 8, if colors are working properly in text mode.