• You can disable colorizing for the whole class insetUpClass() instead ofsetUp().
• Would not it be simpler to implement the core functionality as a generator-based context manager? You can useenterContext() orenterClassContext() with it.
• You can usetest.support.os_helper.EnvironmentVarGuard() to restore the environment andtest.support.swap_attr() to restore_colorize.can_colorize.

You can also implement this as a mixin instead of patching a method (use asuper() call in an overridden method). I do not say that it would be better, but it is just an alternative which you could have overlooked.

Oh nice, the new code is more readable, I prefer context managers :-)

LGTM. Much clearer now!