More like they hadn't worked out what color palette to use to make him (or Mario) look decent.
Luigi is cooler because he is perceived as neglected, and you will not be able to change that.
Luigi in Mario Galaxy is certainly fanservice, and darn justified fanservice. Why the heck shouldn't Luigi be in the game? He's part of the Mario franchise, right? It's always seemed to me like Mario and Luigi should be equals and I thought it was weird that they left him out of Mario Sunshine. SM64 I can understand because it was enough of a problem to make that game in the first place.