I had a problem in my last game that made it so I had to make an entire room dedicated specifically to text during fadeouts... I wanted to try to make a fadeout, show text, and then fade back in, but as soon as the text was displayed, the background instantly came back up! What is the reason for that?
I think when faded-out, everything was supposed to black out, including the texts (and it's not only in 256 colour modes), so if you need text be visible, the screen must be active again.
One solution I can think of, is to add a completely black bg frame, and do it like (v2.62 codes, untested):
FadeOut (5);
SetBackgroundFrame(1); Set it to the BLACK frame
FadeIn (64); //Make sure the bg is not blacked out
Display("blah bla bla");
FadeOut(64); //black out again
SetBackgroundFrame(0); Set it back to original frame
FadeIn (5);