As I mentioned before, changing the dots color has no effect on your output, it is merely to help you organize which dots you are using to do what.
Perhaps you should play around with the sample mixes more to get a better idea of how the fade option works. The baby-dog mix comes with the program. With the dots already set to fade to different pictures, you can see how the mix looks like:
If you simply select all of the dots, and then select "blend" from the fade dots menu, you will see what the mix looks like before any fade dots where used. It would look just like this:
Try fading all of the dots to the start or end, and you will see how the picture resembles the baby or the dog, but somewhat distorted because the dots positions are still transitioned as a mix, but the picture colors are taken from only one of the sides.