"Is this room green?"

Translation: क्या यह कमरा हरा है?

[Gemsalike22]

Why can't इस be used here?

[vinay92]

इस is the oblique case form of यह to be used when it is the object of a postposition. यह is in the direct case in the above sentence.

The sentence क्या इस कमरे का रंग हरा है? (which means the same thing) uses इस instead because the noun phrase 'इस कमरे' is in the oblique case since it is the object of the postposition 'का'.

[another-dave]

& the second one, are you literally saying — "Is this room's colour green?", right?

[vinay92]

Yes. Correct.