Hi, Gary. Welcome back.
You're well on your way to a fine system. The only thing I'd suggest would be some more RAM - any single-sided 72pin SIMM will do. These are all over eBay, some are even advertised as being Amiga-compatible, albeit, with a markup.
I have no idea about the color problem. Failing capacitors seems to be a common problem these days, so you might want to check those out, but I don't know if they're involved in video circuitry.
640x512 is the highest you can go on a TV. The Amiga's weird video modes are a big problem these days as not many devices can display them. A thing called a scandoubler will allow you to connect to a standard monitor, but these are irritatingly rare and expensive.
Jens Schoenfeld is developing a new one (info isn't on the website), so that'll hopefully solve the "rare" problem. It also scandoubles a custom-written display mode (on Aminet) that allows 1024x768.
For higher resolutions, you'll need to move the Amiga into a tower case and add a busboard and graphics card. Or get a big-box Amiga and just add a graphics card.
Some LCD displays can handle the Amiga's 15KHz rate, but they also need to be able to handle PAL's 50Hz refresh. Many can't.
With a plain 23pin to 15pin adapter (carried by most Amiga dealers) you can use the DblPAL/DblNTSC and Multiscan screenmodes on a VGA monitor. You can't display regular PAL and NTSC with this arrangement, so it's useless for most games.
