The Cascade Variables option in an Order Guide populates variables from the Order Guide to the resulting Catalog Items when they exist with the same name. So on the Order Guide, whichever variables are populated, when you go to the next screen / choose options, variables with the same name will be populated on the Catalog Item(s), but after the request is submitted, cascade variables no longer has an effect, so in your scenario the variable would remain populated with 'green'.
