I've only really seen lawn dye used when the city is Hydroseeding.  I know they use a green dye to make it look more natural until the seen germinates and real growth replaces the dye.  The dye is biodegradable and I believe also prevents or inhibits the birds from stealing the seeds.
I hadn't heard of using lawn dye in small jobs.  So, I did some research and found a youtube video about it.  It showed a demo, and it really looked rather neat!  I have a patch which the dog, unfortunately, used to use and it is quite brown.  I think I will spread some seed first though, to make sure real green grass replaces the dyed grass.
Thanks for the thread.  :smile: