Has anyone figured it out yet? So far no saved game editor has fixed this, and going back to another save does not work characters recruited from an Inn, they are automatically hired with corrupt colors. Also I have found the female and alchemist avatars to be the most likely to become corrupted.

Since hiring out of the inns corrupts the graphics, it annoys the hell out of me, and thus that removes a very large game feature. The ability to loose characters permanently and have to hire new ones! For long epic games, this is kind of nice, particularly if you want to play a "dead is dead" game!

I beg someone who has the know how, to fix this once and for all! Or at least an editor that allows us to reset the avatars!

I have no idea if it will do what you want, but you should check out this thread:
http://www.gog.com/forum/darklands/useful_character_editor_by_jugglindan

To fix in-game, go to an inn, save, and allow one of the characters to retire. When you look for a "replacement" party member, you can rehire him immediately, but before that, or rather before leaving the party screen, you get the chance to change all of your characters' appearances and heraldry.

Letting someone retire costs 20% of your cash on-hand, just a heads-up.

(If something goes really wrong make sure to exit darklands so that all data gets cleared from the memory, and reload the save.)

sadly this also has the color bug if you are retiring a female or an alchemist avatar. Standard males work fine or so it seems.

It works, but when you switch between characters in party formation (the big grey screen), it can confuse the game about the model and palette for each character. Every time you select a character, you will need to set his appearance up again. So just do it once and it's painless.