Does the insulated #8 grounding conductor inside the PVC conduit connected to the back of a wet niche fixture need to be green in color?

No, according to 680.23(B)(2)(a), but 250.119 seems to say yes.

The 2005 NEC recognizes this conductor for its fuction..."a bonding jumper" and therefore would not be required to be green in color...

shortcircuit

I wish the Code panel would make up their mind on what that #8 wire is called. The '02 calls it a grounding conductor and so the color code would kick in but, the '05 calls it a bonding conductor and the color code would not apply???IMHO.

The NEC is full of confusion...the old 'grounding or bonding' issue abounds.
As a "simple mans' rule,' when I get confused I ask myself "is this wire for lightning protection?" If so, then it's a 'ground.' If not, it's a 'bond."

Using this understanding, let's consider the wire from the panel to the water pipe.
In an old house, where there is no ground rod, this is a 'ground wire' or GEC.
In a new house, this wire is there to clear any fault current to the plumbing- so it's a bond, not a ground.

Probably over-simple, but it does help me keep focused.

I'd say that, since the conductor does not require being brought back to the panel feeding the equipment (if any), and is for minimizing gradients, it's a bonding conductor.

How about "Pool Gradient Conductor." Sounds official, and really can't be confused with an EGC.

Shortcircuit has it. There was an error in the code when they called the #8 in the pipe to the forming shell a grounding conductor and it was fixed in the 2005 code.
There were 4 proposals that all said essentially the same thing (17-93, 4, 5
& 6)