Possible reason for color blotches
Its possible that the Paperwhite INTENTIONALLY had a color eInk screen inserted with a future firmware upgrade required to properly use it.
In that case the first firmware upgrade may correct all the random color blotches and a firmware upgrade after that may enable the PW to correctly show color pictures in books and magazines.
If that is the case, then all the returns may have been in vain especially if the color blotches don't really interfere with reading.
The problems we are seeing may simply be the situation in any first generation eReader with a totally new configuration.