Yes it can change them to the dye kit colors. I don't know all the details though so I'd go with the post above mine. The springs did change two of my creatu calico though =)
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So basically you can't have your pets change color until you are on tier 3 no matter what? Good that means I can have my Calico pet selected until then.
I'm just glad that it gives you the choice to keep the color change or not. It tried to turn my achromatic chimby sepia and I freaked out for a few seconds.