In all honesty, I think it’s likely a simple mistake.
The object that artists use to hold their paints is actually a third homophone, spelled palette.
It could be that the word choice was intentional and is referencing the character’s bed, but I find it more likely that it was simply lost in translation from the original Japanese
Then why is Pallet Town spelled like that? It’s a reference to colors.
In all honesty, I think it’s likely a simple mistake.
The object that artists use to hold their paints is actually a third homophone, spelled palette.
It could be that the word choice was intentional and is referencing the character’s bed, but I find it more likely that it was simply lost in translation from the original Japanese