Nice that you figured it out! About the color normally multiplying the color with the “light buffer” should work, but I dont think you should do that on diffuse but rather on the scene color aka “Post Process 0” though that it diminishes the banding you have to show some screenshots on that. I also am not sure what kinf of look up table are you talking about. Is it like a gradient texture or?
Check out this video, it might give you some pointers - https://www.youtube.com/watch?v=dFEzkMzlT6A