I started handcoloring seven or eight years ago, before I ever picked up the camera for myself. I was handcoloring for other photographers (yuck.)
Personally, I despise spot pens for handcoloring. Might as well use a magic marker. I've use peerless watercolors, and I like them for some things, but they are much harder to use until you get the hang of them, and they're a whole lot harder to fix if you make a mistake, or just plain want to start over. I dislike pencils except for fine detail, because they can't be layered very effectively without spraying the print in between.
Nope, for me, good old Marshall's oils are best. I never have to let the print dry between layers, I just put it down gently and work carefully. I don't handcolor much any more, but I used to do tons of it, and I always finished a print i one session. I didn't use Marlene, because a grey kneadable rubber eraser does the same thing, and much more neatly and precisely.
My background is in oil painting, so that came in very handy when learning to handcolor. Still, with oils, it's a very easy skill to learn. Of course, like any art, it's quite another thing to completely master the technique.
Incidentally, you can find just about anything you want to know at handcolor.com.
- CJ