I saw a picture of a cake that looked like they used piping gel for the writing and they colored it with dark blue tint... It was obviously not professionally done and couldn't tell for sure.. It was like the food color separated from the gel and ran down the middle of the cake! would the gel do this or any idea what it was that did?? and also if the gel does this, any ways of preventing it??

They might have used it on top of a fairly humid icing, or they might have put it on so long before they needed the cake that the colors started to bleed. I'd try melting a little gelatin to mix with the piping gel and use as little food coloring as I could get away with to get the color I wanted. When I say try, I mean I'd try it out before I actually used it on a cake I was going to give or sell to somebody.