I always thought that the 'red is very destructive for a child's morale' logic was rubbish - for a start it ruins the 'my teacher loves me because she puts kisses all over my page' joke.
I am howver a convert to using a green pen in a different way. Faced with a pupil who was creatively inspiring but with poor spelling, my solution, which has had significant benefits, has been to tick in green all the words he has spelt correctly. He then can see at a glance levels of progress with his spelling. Any he checks and changes then get red ticks, which shows the effort he has put in at changing.
This simple school hack has made an enormous difference to his efforts with spelling, without inhibiting his actual flow.