For me, yes, the colour was distracting. I guessed you were using it to differentiate speakers, but as it wasn't needed -- what they said differentiated them enough to my mind -- it added an element of whimsy that I find hard to appreciate. I have the same problem with sound effects, unfortunately, since they are irredeemably comic to my mind, which is fine in a comic piece, but this wasn't comedic enough, if you see what I mean.
The truffle I thought of as a chocolate, going with the other sweets of the candy Council and the caramel impersonation. I would certainly never have thought of him as a mushroom, since though truffles are a type of fungus, they're decidedly not mushrooms.
The real problem for me, though, is that I couldn't work out what was going on, or make the link between the separate bits of the story -- what is the vision about, why does the onion fall off, why a hobbit and mushrooms, why does the wagon think it's committed murder etc. Even allowing for absurdity, for me it didn't make the kind of sense needed to be complete. Sorry.