Yes, you can color it. I use the gel food coloring and kinda stretch it into the fondant, like when you stretch taffy. You might want to wear gloves or the coloring will get all over you.
If you don't mind doing a little bit of extra work, you could do what I do...I make marshmallow fondant and it tastes sooooo much better than regular fondant. Just get a bag of the small marshmallow, add about a tablespoon of water, put it in the microwave for 45 seconds, stir it up to make sure its all melted (put back in for 10 seconds at a time if its not all melted), add in a 2 pound bag of powdered sugar a little bit at a time, after a while you'll have to knead with your hands instead of a spoon....tada! Yummy marshmallow fondant
