It appears 'knife bootstrap' quite showing colorized output following the recent UI refactoring.
When chaining subcommands it appears the config options from the current subcommand must be merged in with the chainee:
ssh = Chef::Knife::Ssh.new
This will ensure defaults like -color and -no-color are picked up correctly.
Fix is here
This will also require the same fix in all knife-* gems that chain knife bootstrap.
changed my approach after chatting with Dan. made the fix up in the core knife class:
fix is still available here: