All colors disappear eventually as the different wave lengths of light filter out. Colors only exsist because of the different waves of light that shine on them. When you look at a red shirt, it appears red because of the infra-red light waves. If you filter out those infra-red light waves, that shirt will appear as a washed out gray, or lack of color. That is pretty much why sunsets tend to have a lot of red in them as the dissapear, the infra-red light waves are the easiest to bend. Same as in the water. The water bends those light waves to the point that they don’t penetrate the water enough to give a red hook any color. Same with all colors. Your blue/purple colors are the last to disappear since ultra-violet light waves are the longest and the last to be filtered out by water. Black, while still a color, doesn’t fade away per say, it just disappears for lack, or absence, of any light.
As for fish seeing colors, yes they do. The sensory cones in a walleye’s eyes are known to see green and yellow the best.
Red works good with fish because it is the same color as blood. Regardless what depth the water, fish recognize that color as the same color as blood, which they interpet as a wounded/bleeding fish, and thus more susceptable as prey.