Thank you for the feedback!
I had briefly considered simply making each weapon less effective to the opposite colour, but part of the core concept I wanted to include is a risk-reward relationship with higher level weapons, meaning a fast-firing but inaccurate weapon is technically better at taking out crowds of enemies, but also riskier to use because there's a punishment for mismatching weapon and enemy colour.
Focusing on the sacrifice mechanic seems like a good direction for future versions, a lot of commenters seem to like that segment of the gameloop "chain" ;)
As for the narrative justification, I have a sci-fi concept in mind involving hard light fabricators which would also explain your weapons magically upgrading mid-combat, but telling that story was beyond the scope of this jam entry, especially with such a small team.