I would advise against using coloring or pre mixes in your loop as it can clump together and clog your blocks and even cause discoloration on some parts. So I agree with your first choice of going with distilled water(be sure to use something like PT nuke or a kill coil to keep it clean).
Also as Meoricin said I too would go with red tubing. Get some good tubing, a lot of it is UV reactive so it will give you some nice affects if you have a UV cathode, but even without UV lighting it still looks great. be sure to get some high quality tubing, as the low quality stuff is prone to kinking and discoloration (low quality tubing can get cloudy). A good brand is Tygon or Primochill. I'm not sure about the color choices of tygon, but primochill has a variety of colors.
Hope this helps!