I'm pretty sure eLCDIF can extend 16-bit data to 24-bit on its own, copying the highest bits into the lowest to maintain proper range. The ST7277 datasheet says it upconverts the same way, although I would have doubts on a screen that small having a full 8 bits of range anyway.
I'm pretty sure it just pads the lowest bits as 0's for each colour. So in the 565 format if you had 5 bits of red, when converted to 888 the lower 3 bits would be 0 (1111 1000)
This is a lot smaller dynamic range then if doing a proper conversion. 5 bits of red should convert to 1111 1111
*edit*
So im wrong, the padding was for the conversion going from 24 bit colour data to 16 bit output.
From the imxrt1062 data sheet
LCDIF_CTRL[WORD_LENGTH], eLCDIF will perform RGB to RGB color space
conversion. For example, if the input frame has fewer bits per pixel than the display, as in
a 16 bpp input frame going to 24 bpp LCD, eLCDIF will pad the MSBs of each color to
the LSBs of the same color for each pixel. If the input frame has more bits per pixel than
the display, for example, 24 bpp input frame going to 16 bpp LCD, eLCDIF will drop the
LSBs of each color channel to convert to the lower color depth