Andrew,
Yes, the arguments available to apply_pal binary (0 or 1).
A good option to use with apply_pal is mask (also binary).
Here's your scene with and without the mask option using the following commands:
l2mapgen ifile=S2008096002004.L2_GAC ofile=S2008096002004.L2_GAC.chl.mskd prod=chlor_a apply_pal=1 threshold=0.1 mask=1 width=400
l2mapgen ifile=S2008096002004.L2_GAC ofile=S2008096002004.L2_GAC.chl prod=chlor_a apply_pal=1 threshold=0.1 width=400
You can also change the color palette used:
l2mapgen ifile=S2008096002004.L2_GAC ofile=S2008096002004.L2_GAC.chl.mskd.sstpal prod=chlor_a palfile=$SEADAS/data/common/palette/sst.pal threshold=0.1 mask=1 width=400
Any 256 element RGB triplet palette can be used.
Regards,
Sean