The filters affect the whole surface that is drawn to screen, however, these kinds of filters typically work best when colors are clearly separated and not blended. I'm not at home right now, but I'll put up a screenshot later tonight.
Contrary to what you believe, DosBox is not at all CPU intensive(unless you are running a CPU intensive application or game through it of course. Dosbox emulates the original DOS environment and runs the games you want through it. Since TLE is a 2D game, very much like the scumm games created at the same resolution(The Dig, Full Throttle, CMI) it should not be a problem at all to run it on lower speced devices. If your hardware can run Win 7, it can mostly definitly run TLE flawlessly. At least without resource intensive scalers.