The early work on separated-kernel image processing using finite state machines (SKIPSM) concentrated mainly on binary processing which provided a fast means to implement binary morphology with very large structuring elements in a single pass using relatively small lookup tables. The basic concept can be extended to certain gray-scale processing techniques with a useful improvement in processing speed. Gray-scale SKIPSM algorithms present more of a challenge because the extremely large number of states that exist make the use of the lookup tables for the direct implementation of finite state machines impractical. However, as will be demonstrated, it is still possible to realize significant speed advantages with SKIPSM-implemented gray-scale processing using appropriate coding techniques. This paper describes two such techniques, grayscale morphology and Gaussian low-pass filtering.