Enthusiastic web sites promote Outlook 2007 category colors as a feature for Notes ...
... Another option you have for customizing notes is to categorize them by assigning color categories. If you have a large number of notes, this can be a great way of organizing them...
Clearly the author of this me-too web site never actually used this feature. It's unusable.
Here's why. In prior versions of Outlook color attributes were unrelated to categories. In Outlook 2007 color attributes became a property of a category.
This worked well for most aspects of Outlook. The color attribute is displayed in some parts of the UI, but not in the text field.
Notes, however, get the color background on the text field. The resulting text/background color combinations are hallucinogenic. This means Notes can no longer have categories.
The obvious fix would have been to apply the Category color to the notes header -- but that would have required editing the source code for Outlook Notes. I suspect that code is obfuscated assembler and it hasn't been touched in fifteen years.
Since only uber-geeks and Palm users ever use Outlook Notes, much less assign Categories to them, Microsoft chose to sacrifice the Category feature of Notes.
I have to admit it's a rational decision.