I was wondering what is the best way to convert a 24-bit RGB color (8 bits per color) into an 8-bit color (2bits Blue, 3 Green, 3 Red). I'd like C code for doing this.
8 bit RGB is normally an indexed (palettized) color format, see Palette (computing).
The way you described it though, getting 8 bpp out of 24 bpp is pretty straightforward - you would need to strip least significant bits and merge the bits into single byte value, per pixel. AFAIK it is not a standard or well-known pixel color representation.