I think we have one rule:
Recoloured "Low Durability" armor can not be resold.
Recoloured "High Durability" armor can be resold.
By "Low Durability" I meant "Items made with more than 2 low quality materials".
In terms of Lore:
Low quality materials are damaged when high quality dyes are applied to them.
Items made using more than 2 low quality materials will suffer damage of 26% during the dyeing process.
1/ existing Blue Armor made from 100% blue mats may be recoloured to (say) Red and retain 100% of their durability.
2/ existing Green Armor made from 50% blue mats and 50% green mats may be recoloured to (say) Red but will retain only 74% of their durability after recolouring.
This stops people dying green Armor red and selling it.