On one of the MUDs I play on, players are allowed to add colour into speech, GMs are allowed to add colours to peoples titles, etc. I think it's good if you do have tasteful colour usage. It can really help get over someone's character better if they can have colour in their titles say (like red for a Fire Wizard).
I do think that people should have the option of supressing colours if they want to though.
I don't really agree with muliticoloured words though. It may just be me, but it seems abit silly when this is done.
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