The instructions explain it in full but, red is the slow but strong style, blue is the fast weak style and yellow is the medium style, they each have their advantages and disasvantages and some moves only work in some styles.
Oh and to change the player model just type
in the console, I'm not 100% sure it works as I havent tryed it with outcast, it works in academy though. the name has to be of an NPC eg
there are also many mods you can get from www.lucasfiles.com
that would do the job (and would work in the cut sceens).
hope that helps.