Streamed for a bit tonight, and actually did figure out the issue with the cube growing back the wrong color.
Basically, the tree cube spawner instantiates 2 cubes at start. One is enabled, and one is not.
All cubes are actually instantiated as blue cubes, and then the colors are set accordingly (since they all need their own material instances anyway).
When you grab a cube, it basically swaps the two, putting one on the tree, making the other active off-tree.
It turned out there was a block of code where the color of the cube was being set that was for some reason commented out
Uncommenting it did the trick. Simple enough, but it did they me a while to get there. Most of it was figuring out the logic of the code.