I've successfully reproduced this bug. This works with all combination of dyes.
What type of sign is it and what orientation? It works just fine for me.
Upon further inspection, turns out it was the generation that crashed my game. Apologize.
World version is 18w16b
Suggested Edit:
Title - Looms doesn't change the output color when the input dye is swapped.
Description - If you put a dye in the loom, choose a pattern, then replace the dye with another color by left clicking the dye in the loom with a new type of dye on cursor, the resulting item shows the color of the original dye, not the color of the dye that is swapped with the original.