As pittrek says, the colors are based on a Technicolor print. It was sometimes difficult to get them to look better, because of how screwed up the source is, but I think it looks ok all things considered. If you feel it's too saturated, you can always lower the saturation on your TV - I remember when I first played v2.0 on my parents' HDTV and I was horrified at how over-saturated it looked, only to find out, that their TV was pretty badly miss-calibrated.

Also, sorry to go a bit off topic here but I need some technical help with interlaced video in AE. More here.