Divide the screen into squares or hexagons. Or triangles. Or diamonds. Each square has an R velocity, a G velocity, a B velocity, and a current RGB value. When R, G or B hits 0 or 255, the velocity inverts. Perhaps a sine wave would be better than a sawtooth though. Also using Hue, Saturation and Brightness might make for a better effect, I haven't tried it. (In that case Hue should cycle from end to beginning and not be a sine wave.)

i've already written this, but i'm not sure where it is.