Connecting a 10 bit camera to a CPU with 8 bit camera interface
In using the parallel data Interface, that really is the only choice that you have for dropping bits.  If you drop the higher bits you'll get severe scene degradation.

If you have additional resources (in say a FPGA) or the like, you could put a tone curve (compressive) on the data and reduce the bit depth from 10 bit to 8 bit.  Since shot noise follows a roughly scaled sqrt curve you should be able to follow a fractional power and not notice the difference in the final result.