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This band is where the PxMid is supposed to be placed. (The PxMid is the looping graphic that extends along the base of a level merely to look pretty; check Unemployed in Greenland in MASCOT for an example.)
The funny colors are caused by MASCOT being given a nonexistent PICT resource value for PxMid in Level Info. To fix this, enter the Level Info and replace the following fields with 0: (list) () PxMid () Layering (*) INFO(9), INFO(10), INFO(11)