recording the channels separately comes in handy if you want to add effects to the individual instruments. It will however increase the noise, mess with your track timing, and possibly create phase issues. Id recommend:
Recording the best possible stereo track, Sound design in the gameboy helps alot.
Multi track stuff you want to put effects on, but minimize this if you can to avoid noise problems.
When not using the solo'd channel, mute it, maybe just use it with the stereo track mixed 100% wet to reinforce your dmg sounds.
I dont really run any noise reduction, but ill do vol automation on the silent parts where you can hear noise. Another fun thing to do is sequence additional low end version of your gameboy sounds and mix them low in the mix to make it really pop on big systems.