
If you change the FORMAT to image/jpeg ( by right clicking on the image overlay icon on the left frame and choosing Properties ) on the description of the image overlay then the colors go back to normal and you see the ortophoto with the original colors.

So it seems that Google Earth automatically chooses the image/gif format to fetch the WMS imagery. I have bee reviewing the original question and it seems that the problem when adding the original WMS service was due to the FORMAT and the WIDTH and HEIGHT that is set automatically by Google Earth when adding the image overlay!
