The colour change will only show if the hidden text is displayed in Word's options. If the text is not displayed it can't be selected, so you should create a character style and apply it to the text you want to toggle. Call it (say) "Hidden". Then it doesn't matter whether the text is displayed or not as you would change the style rather than the selection e.g.
With ActiveDocument.Styles("Hidden")
If .Font.Hidden = True Then
.Font.Hidden = False
.Font.Color = wdColorAutomatic
Else
.Font.Hidden = True
.Font.Color = wdColorRed 'as the font is hidden this is irrelevant unless the hidden text is displayed
End If
End With