First off, try making the game brighter instead. It is impossible to see anything in this.
Go to the options and try pulling up the brightness.
If you want to change it either way, you can go into the factions.xml or the expansionfactions.xml(the later I'm not sure of, I am at work ATM) and there is a line there refering to coloring.
also why doesn't it show on the pop up for units who they are weak and strong against?
From one side, there are so many units in the mod at the moment that it wouldn't really be accurate anymore. From the other side it does not really work out like that anymore. You can find many help and guides here in the forums if you need them.
can the mod only support 3 playable factions and 1 pirate faction at one time?
In the 2.1, it already has 4 fully playable faction(Imperial Remnant, New Republic, Empire of the Hand and Pentastar Alignment) and 1 that is only playable in 1 GC(Duskhan League) and 2 more minor factions(Hapes Consortium and the Warlords).
With 2.2 this is going to increase to 8 fully playable factions(Imperial Remnant, New Republic, Empire of the Hand, Pentastar Alignment, Warlord Zsinj, Greater Maldrood, Eriadu Authority and an expanded Duskhan League) and several smaller unplayaqble ones.
Keep in mind that some factions are unplayable in certain GCs. From the list of playable factions in a GC look at the GC's description.
Also what happens if your faction leader gets killed, its gone forever? any major hero does not return?
Yes. Every hero you loose is lost for good. There are a very few exceptions who can return in a later era.