Yes, it would appear you're correct. How unusual - I also have a /home/root directory and no /root directory.
The uncouloured prompt is because when you do a 'su -' it's spawning a new instance of /bin/sh, which on the Pandora is actually a link to busybox. Busybox is a single executable that similates shell, copy, cd and other commonly used commands - it's quite common on embedded linux. It appears that busybox most closely emulates ash, judging by the file traces it leaves in /home/root (most notable a .ash_history file)
You can change this by doing issuing a chsh command. Issue it on its own as root and it'll interactively take you through the setting - use /bin/bash and next time you do a 'su -' it'll read any .bashrc in /home/root and apply those prompt settings. No idea if that's the best way to do it on Pandora, but personally I don't see the need to use busybox on a machine like the Pandora.