The value of dyes in chilled water and hot water boiler treatment products cannot be understated. When I worked for a major water treatment company, we frequently used a nitrite/borate/azole product that contained a yellow-green dye.
The use of the dye was added to help locate leaks in chilled or hot water piping systems. When mixed with water, the color made the treated water look like antifreeze.
I first used this product in a hot water heating loop that had been previously treated with a similar corrosion inhibitor package except there was no dye in the previous formula. The previous corrosion inhibitor had to be added on a monthly basis even though no system leaks were ever found. One day I received a panicked call from the customer who told me the water in his steam boilers had turned green! At last, we found the reason for the water loss as the tube bundle for the steam heated hot water loop had been leaking for some time. The dye showing up in the boilers confirmed the heat exchanger leak.
A few months later, I received another urgent call from the same customer who told me that one of their visitors complained of yellow-green water coming out of one of the drinking fountains! This time, one of the maintenance men who installed a new drinking fountain thought the nearby chilled water line was the domestic cold water and used it as the fountain supply line. As far as we know, no one suffered ill effects but nitrite as well as azole are chemicals that you should not drink. You can read about the health affects of these chemicals on the CDC website.
Over the years, at least two of my customers found leaking pop off valves on their hot water boilers after finding the boiler room floor stained with the dye. Another customer had some old fermentation reactors that had chilled water, steam, and cooling tower water piped into the jacketed vessels. All of the valves on these various lines were thought to be in good working order until the water in both steam boilers turned green. The leaking chilled water valves were then replaced.
It would seem the use of dyes in closed loop formulations would be more prevalent however there are disadvantages to using dyes in closed loop products. The biggest complaint is with the nitrite test accuracy. The accuracy of the nitrite test can be greatly affected when using a photometer because of the affect on light transmittance. A better test would be the potassium permanganate titration test using a burette (rather than counting drops). Most people dislike using permanganate because it can stain lab glassware as well as your hands and clothing. In addition, the shelf life on potassium permanganate is not very long as it will turn from purple to brown over time.
The use of activated carbon filtration prior to testing has been useful in many cases in removing the dye color prior to testing.