Colour flow is a technique using RI to make pictures to put onto cakes. You put a piece of wax paper over the picture (taped down), outline it with RI (all the lines, not just the outside), let it dry, then fill in with whatever colours of RI you want (you "flow" the colour(s) into the area).
It's a technique you can learn in the Wilton's course (Level 2, I think).
Drying time depends on thickness and size of the colour flow you've created, but usually a couple of hours, at least. It should give it a bit of a puffy appearance.
It's been awhile since I decorated with RI, so perhaps someone else can answer your third question.
Wilton calls the technique of run sugar Colorflow. Slight differences in how it's done.
Cover what you are making (picture/drawing) with plastic wrap making sure the plastic is completely smooth.
Use full strength royal icing in a parchment bag, using tip 2 or 3 to outline your figure/drawing.
Spoon some of that icing into a small bowl/cup and add some drops of water stirring slowly so as not to produce any bubbles. Test by spooning out a bit and dropping it back into the cup. Slowly count to 10; if the blob has melted back into the icing it is ready; if it is gone before the count of 10 it is too thin - add more full strength; if it is still visible add another DROP of water until it is right.
Now, pour this into the outline you made. Some use a parchment bag w/ NO tip - just cut a teeny, tiny bit of the tip off. It depends on the size of the drawing you are flooding. Coaks this flow into any corners etc w/a toothpick. The flow must touch all outlines. Fill your figure/drawing *almost* to overflowing as it will settle down as it dries. If you have not filled it full enough it will look depressed.
How long it takes to dry will depend on the weather and size of the drawing. Probably best to allow at least overnight to be sure.
Coloring can be added at the beginning. If there are 2 or more areas of the pic that are the same color do all those at the same time, then move on to another color.
Once royal/colorflow pieces are dry they can be put on b'cream cakes. The smaller the item the more chance of having it soak up some grease piece softening it, but it should not melt into a puddle.
If you are really worried about that make some royal icing spikes on the back of the piece before you place it on the cake (let them dry hard).
Hope that answers all you ?s 
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