We've always gone with a low-color approach for the same reasons books are (usually) sold with white paper and black text. We're working in a text medium in part because it allows the freedom of imagination a book does. If you're writing your descriptions correctly, you simply don't need color. If I picked up a copy of a new fantasy book, and the author felt it necessary to color the word "Tree" green every time he or she used it, I would wonder if I had accidentally wandered into the children's section.
Thus, we use color sparingly, and primarily to highlight communication. (And even that is optional.) We're a roleplaying-mandatory MUD, so we don't want people to not notice speech during a heated battle or quick sprint, and we felt that was a necessary concession.
That said, I agree with the sentiment that most MUDs I have visited strongly overuse color as a visual tool.
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