OK, I've tried copying bgpalfx lines from the code and modifying them like you said. The result was:
[State 3000, 14]
type = BGPalFX
Trigger1 = time = 0 && prevstateno = 3300
ignorehitpause = 1
add = -128,-128,128
time = 1
[State 3000, 15]
type = BGPalFX
Trigger1 = time = 2 && prevstateno = 3300
ignorehitpause = 1
add = 256,256,256
time = 1
[State 3000, 16]
type = BGPalFX
Trigger1 = time = 4 && prevstateno = 3300
ignorehitpause = 1
add = -128,-128,128
time = 1
[State 3000, 17]
type = BGPalFX
Trigger1 = time = 6 && prevstateno = 3300
ignorehitpause = 1
add = 256,256,256
time = 1
The normal dango (state 3000) code stops at number 13 so I added the lines after that. The effect this block of code has it that it adds four flashes of coloured backgrounds to the cancel, seemingly white and cyan, so it does WORK, but it's not the red stars thing I was hoping for. Unfortunately I can't find any part of the whole code that has a different bgpalfx even though I KNOW there is a red stars code already present in the character. What am I missing here?