@esillar, for retaining colors in embedded dashboard using either one of the two options, you would need to modify one or the other .conf file.
So, since you are familiar with the option to save as report and then embed as iframe in external webpage, you should try to see if Splunk Admin can assist with the modification of savedsearches.conf file. The change will be specific to your Saved Search in your app and nothing else.
If you have complete control on your external page where you are embedding the report, you also have an option to modify DOM through jQuery and override the Colors in your external webpage . That would be complicated since SVG elements and CSS for the chart would be applied already. But a Web Developer can give that a try.
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