Red = You
Yellow = Ally
Blue = enemy
The colors I choose are quite common, and are very distinguishable, even for most color blindnesses.
I would say red is common for enemy, if we talk not about KaM, but other games, as Red is the most visible color and seeing enemy is the most important thing, even more important, then seeing your troops/houses, as you usually know where they should be.
That is why I would prefer to have red for enemy and, let's say, blue for own troops. For allies that could be yellow or light blue as well.
That basically means we have different point of view with Ben on colors for team/ally/enemy. So customising is a way how to deal with that. Other option could be just adjust someone's point of view and use what was added to the game by developer.
Cluttering UI is a problem indeed, but I would love to be able to customize game on the client side as much as I want to, unless it gives player some advantage.
We already have possibility to swap any sprite in the game with Sprites directory and I think that is great. I know some players that customised their UI a lot, just like Windows wallpaper or style.
Also adding couple of ini settings is a 5 minute standart task that is not complicated at all IMO.