So I finally straightened out what was what with my video hardware and software.  I had B swapped with G on the pinouts for the VGA connector, and also the MSB swapped with the LSB.  Along with some hardware bugs with the memory sizing and a few other programming mistakes.  After correcting all of it, this is the result!  It is a pretty faithful reproduction of the .png I started with - although the resolution I am using now makes the Atari 2600 look like a Retina display.

Next Up:

• Add in some missing ALU operations, like shift, that are badly needed.
• Improve the speed of the bootloader - it's like my Commodore 64 cassette drive over here.
• Start looking into, sigh, a bigger memory.  Sigh because it means redoing the CPU quite a bit., for timing and addressing reasons But hopefully easier the second time around.
• Something has to be done about the software.  Assembly programming sux.  Maybe it's just my assembly language that sucks, I don't know.  But I miss being able to declare statements with expressions, subroutines, and stuff.  I think perhaps the next explorations for this project will be on the software side.
• Video system as designed is rather slow - 3 I/O operations to write an x, y, and color.  I did that on purpose to keep my sanity, but now that it works, there's probably a better way..