I do not hold out much hope for the popup solution.
Popups are a problem because they have no background, and that is the only place you can put graphics that are not subject to the highlight limitations.
But Blu-ray highlights are higher bit depth. Make sure you select rich color in menu properties. I do NOT know if this applies to popups, but I think it should.
http://helpx.adobe.com/encore/using/button-subpictures-highlighting.html
"Encore supports 8-bit color in subpictures for Blu-ray disc menus. You can export 256-color menu subpictures for Blu-ray. In addition, you can export full original colors for menu button highlights in Flash.
To export subpictures in full original colors, select Export Highlights in Rich Color in the Menu Properties pane. Encore displays menu highlights with full colors in Menu Editor.
However, Encore only displays two-bit DVD colors in the Preview panel. If you do not enable this feature, Encore exports menu highlights in two-bit colors for Blu-ray and Flash."
What is our client really trying to do? If it is a promo piece, you would normally have the logo etc in all the time, or at particular points that are determined strategically. Perhaps he/she can't make up their mind? I would also consider a 3 video version: with, without, and strategic on/off.