Unless you have a Kahr board installed (that creates a dedicated 5V input to the CPU from the unregulated 12V supply), overloading 12V will not drop the 5V line and cause a reset. You might blow a fuse but it won't have any impact on 5V. Installation of the ColorDMD won't cause this problem.
Resets are usually caused by 5V dipping due to coupling in the transformer and triggered when the high power coils are switching on and off and pulling a lot of current all at once. They're most common when hitting both flippers at the same time in rapid succession. If the output cap on the 5V supply isn't holding the voltage well, the voltage on the 5V line will fluctuate. When the 5V line dips below the watchdog voltage level, the CPU resets.
You're seeing it happen in multiball because that's when the coils are firing the most. If you can produce the problem when hitting both flippers, you'll see it happens with the display connected or disconnected.