Does HD or HDV offer the full 8bit color spectrum or is it limited to the exisiting broadcast safe 12 million colors like analog/SD/DV.

If it takes advantage of the full 16 million, would that explain why so much 1080i footage looks so vivid.

HDV uses the ITU bt.709 colorspace, and uses the full 8 bit spectrum.
Michael Robin has a great article at http://broadcastengineering.com/aps/infrastructure/broadcasting_colorimetry_standards/

Thanks, the article explains a lot.