There are many reliable reports of observers seeing color in nebulae through small and moderate aperture telescopes. Personally, I've seen M42 as forest green, lime green and several other shades of green in my 10-inch Newt. I've also seen color in planetary nebulae (greens and blues) and in bright galaxies (blues and yellows).
Some folks may hold to the notion that we can't see color in nebulae because they assume the eye is fully dark adapted when observing through a telescope. When fully dark adapted, the eye's rod cells dominate visual perception. This is described as scotopic vision. Since the cone cells are responsible for color perception, it would be logical to conclude that we can't see color in nebulae if fully dark adapted.
The problem is, we're often not fully dark adapted when out with our telescopes. Much of the time our vision can be described as mesopic: relying on both rods and cones for visual perception. This is because even the darkest night sky is still bright enough to stimulate cone cell activity. With the cones still active, color perception remains possible. Hence, our ability to enjoy the colorful hues of Mars, Antares, Vega and aurorae.
Observing through a telescope lowers the sky brightness. But for large & bright nebulae like M42, observers often use low magnification. Sky brightness--even through the telescope--remains high enough that mesopic vision still prevails and, if the nebulae is bright enough to stimulate the cone cells, color perception is possible.
High magnification can reduce the sky brightness level enough that visual adaptation will complete. This takes time--half an hour or longer for most folks--and extraneous light sources need to be blocked. But the rod cells will eventually dominate and our ability to resolve faint extended objects is maximized. It's under these conditions that I would expect an observer's color perception to be essentially non-existent.