Does this filter need any prep before I install it?

No prep needed — pull the old filter out, slide this one in, and you're done. Make sure the rubber seal seats fully in the air box before closing the lid.

Will the red color fade if it gets wet during normal driving?

The red finish is on the surface of the hard panel. It will hold up to normal moisture, but this is an intake filter inside your air box — it stays dry under normal conditions.

Can I clean and reuse this filter, or is it disposable?

Treat it as a disposable filter. Once it's dirty enough to restrict airflow, swap in a fresh one. Attempting to clean the hard panel risks damaging the material or the seal.