Why does everyone & everything look so pale in this movie?

There's a button in editing software called "white wash". :)

The guy likes playing with colors for whatever reason. I'm pretty sure Trixie is in black and white most of the film. Almost everyone else seems to be in red and blue (look in the background, there's even a nurse in one scene in a red and blue nurse outfit.). Big Ben loves money so I'm pretty sure he's got a lot of green clothing (didn't pay too much attention to him to know how often that is for sure, though.)

Because they are white people... Lol. No really, it seems it was to make the other colors pop more, like how the characters wear bright reds, yellows, blues, etc. except for Trixie and her mom. I personally love it because the bright colors make the movie seem more kid-friendly.

I have the digital version and I'd say its a poor HD transfer where the colors look extremely dull.