How can I rename people's names above their names and add colors?

I want to add colors to a player's name tag for a few second. I know how to make it last for a few seconds, but I don't know how to change their names.

 

I have played around with that a few times now.
It is not possible using just the normal Bukkit API.

You need to use Spout for this, and unfortunately the SpoutCraft client mod as well.
In case you are willing to make your players install a mod, this is the method in
the Spout API you need to use:

-> SpoutAPI

 

Hmm. Then how did MobDisguise get it to work?

 

MobDisguise changes you into a completely different mob. That's what changes your name. Also, it uses Spout. It doesn't need the client, though.

 

MobDisguise no longer needs Spout, and it allows people disguise as any players.

 

See it's source
Most likely I think it creates a new entity with a new name, it doesn't actually change the name of the players.