How do they work? does it turn an item into a equippable NX item? Like to fusion a Queen Glory helm and cover Black Hammer helm? or does it stick onto item permanently?
Also should item be colored before applying fusion rune?
It binds the two items and makes it have the appearance of one item, but the stats of another.
should it also be colored before fusing?
should it also be colored before fusing?
Generally, yes. Why take on its appearance if it doesn't look how you want it to?
But to add to what Conor said, while you can dye the "appearance" before and after fusion, the cost of dyeing is based on the "stats" item. So if you wanted to fuse some low level item to a higher level one, you'd be better off dyeing it beforehand (as it will likely cost a lot more to attempt dyeing it after the fusion, assuming you use random 3-color dyeing).
You can't fuse the same look or same stat together, so you need 15 fusion stones.