Birds from dinos was a evolutionary leap, colors might have happened along in there.
But modern reptiles also have lots of color, and are much nearer dinos. Besides chameleons, I have orange yellow green black brown blue gray silver white, all in my back yard.
The reptiles in your back yard are not closer to dinosaurs then to birds. Not unless your back yard includes alligators and crocodiles. Dinosaurs are not closely related to chameleons.
Birds are closer to dinosaurs than most reptiles. Crocodilians are much closer to dinosaurs than lizards, snakes and turtles.
You are confusing the reptile grade with the archosaur clade. Reptile does not have a phylogenic meaning. Birds, dinosaurs, crocodilians and pterosaurs belong in the clade referred to as archosaurs. These guys split off in the Permian period or later. Snakes, lizards and turtles split off from archosaurs earlier than the Permian.
Just a little explanation of jargon before I continue. Extant crocodilians include alligators, crocodiles, caiman and gavails. These are not lizards. Extant lizards include monitor lizards and iguana. Modern crocodilians are far more closer related to modern birds than lizards. Lizards and crocodilians have a superficial resemblance which does not reflect their ancestry.
There are two types of coloration in animals. There is pigmentation, where some chemicals absorb light by turning the light into heat energy. There is structural pigmentation, where some tiny structure disperses light waves into different directions. Extant birds show both types of coloration. I will mention some reasons to think that feathered dinosaurs had both types of coloration.
Crocodilians do have pigmentation.Hence, I don't believe there had to be a sudden leap in pigmentation going from the crocodile/dinosaur MRCA to extant birds. Crocodilians do not have feathers. So maybe the structural coloration in birds evolved separately from those of crocs.
So I don't believe that there was a sudden jump in pigmentation going from 'reptiles' to birds. The dinosaurs most probably had the same pigmentation available in their genetic tool kit as birds. Chemical analysis of fossils have shown that some feathered dinosaurs had pigmentation.
Feathers have a lot of microscopic features. So they would tend to disperse light in many directs. So I don't see how a feathered dinosaur could avoid evolving structural coloration. The microscopic structures haven't survived in fossil feathers. So we don't have direct proof that the dinosaurs had such coloration. However, I have confidence that Bragg's Law was just as valid in the Mesozoic as today. Basic physics doesn't change. So any small structure, in scale of feather, could produce structural coloration.
Lizards evolved structural variation associated with their scales, which have not homologous to feathers. Structural coloration in lizards and birds is analogous. So the fact that there are some colorful lizards has nothing to do with the fact there are colorful birds.
Pigmentation evolved in tetrapods real early. amphibians show a great deal of color based on pigmentation. So pigment molecules are a primitive feature. The coloration due to pigments may have started to evolve when the first tetrapod hauled himself/herself out of the water. So there could not have been a 'sudden leap' in coloration going from reptiles to birds. They are both pigmented due to common ancestry.
So I conjecture there was no 'sudden leap' in coloration going from 'reptiles' to 'birds'.