It would have to be "colored pencils," but yes, that should be accepted as well.
With all due respect, nonsensical sentences like this should be reconsidered and remade to be sensical ones. I do not see what point they make at all.
Sensical sentences are predictable and can be guessed. Nonsensical sentences require 100% comprehension to arrange.
Yes, you might be right in there. However nonsensical sentences provide less useful phrases. I guess I just got annoyed because there are too many sentences like this in this section.