I like the idea of colored coins, some remarks:
1. If you can decolor (or "wash") a coin, it would mean that anyone could simply destroy shared of your project (or whatever it is that the color represents). I don't think this is a good idea. If washing is to be allowed, it should only be allowed by the owner of the color.
I don't think it's bad if a coin is washed because that would simply increase the proportion of the remaing holders of that color.
If it's too hard to wash a coin then there could be loads of "unusable" coins from projects that have been finished. Coins need to be recycled since there are a limited number of coins but potentially an unlimited number of possible projects.
In both cases, how do I actually fund the project?
That is up to the project. The issuer could trade something in exchange for sending the shares (colored coins), like in an IPO.