I've always seen the fool as being a bit aimless, the wanderer, setting out with no clear direction ... when in fact Percivale sees his goal in the emblem of the Knights of the Round Table hanging at the gate of Camelot and is unaware of the trials and work he has to put in to achieve his goal. It's a fairly realistic goal - he's a strong, capable young man. He's allowed his imagination to run ahead, he has no knowledge of what will be expected of him and has a rather romantic notion of what it will all be like inside the castle - a bit of a dreamer, our Percivale - only seeing what he wants to see.
I think the rainbow shows promise for the future. The green landscape indicates that the ideas are flourishing in a positive direction and the little stream is the life-source of the community. Perhaps the little dwellings belong to people seeking refuge, or perhaps they are shepherds huts - animals being a source of wealth and nourishment?
Percivale brings all he has to serve the king - he is ready to risk everything, including his life. His possessions seem meaningless as they are held loosely in his hand, and Camelot takes up his whole vision. Although we know his intent, the little dog is excited and wants to play, perhaps sensing the excitement and wonder or trying to distract his attention?
At this point he is free to make choices - to go on or to turn away ... I think that's something the reverse would indicate - lacking the courage, ambition or means to follow through with what is desired, either because the bubble of the vision is burst, or because taking another step in that direction suddenly seems like hard work, and we'd rather have it just given to us.