For anyone asking about using this in conjunction with ColorDMD, in general I don't see how that would be desirable... It seems to me like you could just not have a ColorDMD and replace the DMD with the LCD that gets its image from the Raspberry Pi, similar to how DMD Extender does it.
However, if you had a game with a ColorDMD, I'd bet that while SmartDMD would not be able to affect the colors displayed on a ColorDMD, it could probably still take the same signal from the game that the ColorDMD takes, and put it on an external monitor and have the same functions on the external monitor that it would have if the original DMD was present. You're just not going to get to a point where the external monitor would be showing the ColorDMD colorization, since it would be getting colorized through a different process and have to have its own colorization.