It's also crowdfunded, which means Mastercoin will probably be developed faster and better. For that reason I don't think it can be considered technically inferior.
The "crowdfunding" method of Mastercoin is questionable, to say the least. Colored coins are supported by both companies such as eToro and volunteers.
Maybe you mean conceptually inferior? But none of the colored coin implementations are going to be superior to Mastercoin when Mastercoin has so much momentum.
I mean that the current design of how Mastercoin is supposed to work is inferior. I can't speculate about what Master coin may or may not evolve into in the future.
I just think the code written for Mastercoin and the organization around developing it is far superior to colored coin which seems to be stalled in its progress by comparison.
Mastercoin currently has almost no code at all. Code may or may not be developed in the future using collected funds. The code that already exists for colored coins is ahead and is still actively developed.
Colored coin doesn't even have a site. See what I mean?
Of course they do, weren't you listening? The old site was bitcoinx.org, now it's superseded by
http://coloredcoins.org/ (which, by the way, is now live! Still being worked on though).
Edit: I followed up on recent developments on Mastercoin and it seems it's a bit further along than I thought. My points still stand though.