That's my idea, yes. :) Though to put it even more simply, matter (or even more specifically the magic it contains) imposes haze, rather than distance. Gases impose the least amount of haze, liquids somewhat moreso, and solids become almost entirely opaque. If he were looking through a vacuum devoid of any matter or magic, his vision would be crystal clear for as far as that vacuum went. Or if an object were somehow made devoid of magic, he would see through it as if it wasn't there. 

Does that make more sense? My hope is that by explaining it that way it will have a good enough base that all the strengths and weaknesses won't have to be completely explained, but can still be extrapolated fairly easily based on how the ability itself functions.

Edit: I too see no reason to disallow the colors, I'm just suggesting a different method of achieving the same effect that requires less work for the writer. :P